The stock market continued its rally which started last Friday when the S&P 500 dropped down to strong support at its 200-day moving average on the daily chart, and the Dow and Nasdaq dropped down to just above their respective 200-DMA support.
With all the three major indices, the Dow, the S&P 500 and the Nasdaq NQ still trading below its key resistance on Monday, we should see continuing rally into resistance on Tuesday before selling comes back in.
Tuesday resistance for NQ is 6600
Failure to rally to resistance is an indication of severe market weakness. With many investors buying the recent decline, a break-back down lower could cause an avalanche of selling, triggering a crash scenario as buyers get run-over from forced margin selling.
With so much damage done to the market during its recent crash, the stage is set for a 1987-style crash.
