This week, we wanted to incorporate at least some of Thursday's trading data, as Wednesday's were a little suspicious. Good thing we did, as we've seen little to no follow-through today. On the other hand, it's not like the market is just getting shredded either.

Let's dig in here, but we'll warn you - most indices are still on the fence. The good news is, we've got some pretty specific make-or-break lines to keep an eye on.

NASDAQ Commentary

As of the time this is being written, the NASDAQ Composite is down 9 points, or -0.37%. Not great if you're a bull, but it still leaves us well up between today and yesterday's big rally. For the week, we're still up 5.96 points, or +0.24%, currently trading at 2457.27.

As we've been dealing with for weeks, the bearish argument seems as good as the bullish one. That, or the third scenario - the technical indicators are mixed to the point of meaninglessness (f that's even a word). We've seen several buys and sells from our stochastics and MACD tools over the last eight weeks, but the composite is now here it was as of November 20. A few swings were seen in the meantime, but for the most part, the index has been stuck in a pretty tight range.

That range, as we mentioned above, will be the framework from which we can make our next trade-worthy call.

While it was put into question with last week's peak of 2509, the ceiling at 2470 still seems to be in place...that's where we topped yesterday, and that's where we rolled over into today's selling mode. Until we make a clean break past that mark, we don't see much need to think too bullishly.

On the other side of the chart, the floor at 2394 is still a factor. We haven't seen it touched on a while, but a glance back to December will remind you that the buyers have used that level to step back up to the plate.

Be patient here. It shouldn't be too much longer until we get some momentum and make a decent move. Which direction that move will be, though, is still in question based on this chart.

NASDAQ Chart


S&P 500 Commentary

In another column, we asked the question of whether or not the VIX was still a useful tool. Our answer? Yes, we feel it's still a great tool, if you apply the right techniques to make it useful. The way we illustrated a practical use of the VIX was with the application of Bollinger bands.

Of course, our column only had the benefit of data through Wednesday. As of today, we have another bar to look at. As described, it does indeed look like kissing that lower Bollinger band occurred simultaneously with a peak in complacency (or a substantial lack of fear or worry) as well as a peak in the market. Of course, as contrarians know, that's when the market usually reverses direction from an uptrend to a downtrend.

Our chart below shows the VIX bouncing off the lower band, and the S&P 500 is 0.25% lower at the same time. Catastrophic? No, not yet. However, the VIX won't hit the other 'extreme' until around 12.50, where the upper Bollinger band lies. Only then will have fear peaked enough for stocks to make a good bottom.

Interestingly, the Bollinger bands are now generally parallel with the VIX's recent sideways trading range, marked with blue, dashed lines.

Conclusion: It's certainly difficult to get overly bearish here, just after the S&P 500 hit multi-year highs. But, between the VIX's bottom, and the fact that the SPX has done a pretty poor job at holding its ground lately, we have to say we expect at least a brief period of weakness in the short run. To what extent that will materialize on the chart is anyone's guess. But, if we had to, we'd use the new support line (red, dashed) as a starting point. It's currently at 1414 and rising. And remember, we anticipate seeing the market bottom at roughly the same time the VIX reaches the mid-12 area.

So far today, the 3.6 point loss leaves the SPX at 1436.55. That's still up for the week though, by 6.05 points, or -0.42%.

S&P 500 Chart


Dow Jones Industrials Commentary

The Dow's holding its ground best today, only off by 0.15%, or -19.07 points. The current level of 12,602.7 is ahead of last week's close by 37.17 points, or 0.3%.

With nothing significant to add to our passively optimistic view of the Dow's chart, we think it's worth sharing a weekly chart here to illustrate the 'bigger picture' trend that's been obscured by a lot of chop recently.

In a nutshell, even the old-reliable Dow is showing a clear slowing of the uptrend. The upward channel from last fall has been replaced by a much less enthusiastic upward channel (though it's still bullish).

The two things that strike us, however, are the tapering off in bullish volume, and the tapering off of the overall momentum. Were actually close to a bearish MACD crossunder on the weekly chart, and the falling Chaikin line tells us the heat has been turned off for the buyers.

Don't misunderstand - this isn't alarm bell. However, it could be, with just a little weakness. The lower edge of the current bullish channel (dashed) is at 12,390. If it breaks, then you can consider this an alarm bell. In the meantime, that same channel is still technically guiding stocks higher, even if at a snail's pace.

Dow Jones Industrials Chart


Price Headley is the founder and chief analyst of BigTrends.com.