Can the Major Indexes Break Above Significant Technical Levels?

The suspense is nearly unbearable as major indexes teeter on the “knife’s edge of suspense” in their struggle to break through significant resistance.

Key levels are 12,000 on the Dow (NYSE:DIA) and 1300 on the S&P 500 (NYSE:SPY) and on Wednesday and Thursday, the bulls took good shots at those key resistance points and failed to break through on a closing basis.

Friday is another day, of course, and if a convincing break higher occurs, (and can be held) this will set the stage for a blast off higher to the next target levels of 13,000 and 1300 on the respective indexes. Failure to breakout, of course, will likely mean a step or two (or more) backwards.

What makes this even more tantalizingly suspenseful is that this technical struggle is taking place against the backdrop of important economic news that arrived today and is scheduled for Friday.

Today weekly unemployment registered another unexpected disappointment, coming in with a rise to 454,000 claims against 403,000 prior and higher than expectations, and the same happened with continuing claims rising to 399,000 from a previous 389,000.

Meanwhile, durable goods came in with a 2.5% decline versus -0.1% in the month prior while pending home sales advanced but at a slower pace than last month.

On the all important earnings front, Microsoft (NASDAQ:MSFT) disappointed on their earnings call while (NASDAQ:AMZN) came up short on earnings and margins and was commensurately flayed in the after hours session with a 9.4% loss.

Overseas, Japan was downgraded to AA- from AA by S&P due to their high debt burden and the sovereign debt problem just won’t seem to back off as Moody’s warned they might lower the U.S. credit rating earlier than expected if we don’t get our fiscal house in order.  (Apparently they missed the State of the Union Address ??  Or??)

So here it’s “déjà vu all over again” to steal Yogi Berra’s famous quote.  Another tipping point in global markets and to make your chest feel even tighter, on Friday we get a look at the all important 4th Quarter GDP report at 0830 eastern time before market open.

Only one thing is certain and that is that we will find out soon if the knife is pointed at the bulls or the bears.

Wall Street Sector Selector remains in “Yellow Flag” status, expecting choppy to lower prices ahead.

Daily Moves for Major ETFs:

Daily Moves for Major ETFs:

Dow Jones Industrials: (NYSE:DIA)              +0.03%

Russell 2000: (NYSE:IWM)                           +0.29%

NASDAQ 100: (Nasdaq:QQQQ)                     +0.62%

S&P 500 Index: (NYSE:SPY)                        +0.22%

MSCI Emerging Markets:(NYSE:EEM)          -0.34%

MSCI China (NYSE:FXI)                                +0.12%

Gold (NYSE:GLD)                                          -2.478%

7-10 Year Treasuries: (NYSE:IEF)                +0.45%

20+ Year Treasuries: (NYSE:TLT)                 +0.45%

VIX: (NYSE:VXX)                                           -2.94%

U.S.  Dollar (NYSE:UUP)                              -0.16%

Disclosure: No positions in ETFs or stocks discussed in this article.

John Nyaradi is the author of Super Sectors: How To Outsmart the Markets Using Sector Rotation and ETFs.

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