Stocks bounce after key indexes again ‘retest’ recent lows

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Major stock market indexes today made another run toward their recent lows, but closed above them thanks to a late rally -- a good sign from chart-watchers’ point of view.

I’ve written about this several times in recent weeks (including here and here), so I don’t want to belabor the issue. Suffice to say that the pattern of ‘retesting’ the lows -- and rallying from those levels -- is encouraging if you’re hoping the market is carving out a bottom here, after the horrendous losses since mid-September.

Some stats from today’s trading:

--- The Dow Jones industrial average looks the best of the major indexes. The Dow fell as low as 8,243 today before closing at 8,691.25. Today’s intraday low was well above the Dow’s worst level of 7,884 on Oct. 10 and also above the intraday low of 8,199 on Oct. 16. So that’s two retests the Dow has passed.

--- The Standard & Poor’s 500 index fell as low as 858 late in the session, then rallied to close at 908.11. The S&P’s lowest point in recent weeks was 840 reached during trading on Oct. 10. The first retest of that low was on Oct. 16, when the index fell to 865. So the S&P still looks like it’s trying to make a stand here.

--- The Nasdaq composite fell as low as 1,533 today, then closed at 1,603.91. The low today was below the previous intraday nadir of 1,542 on Oct. 10 -- a sign that the tech-dominated index is facing a bigger challenge than blue-chip indexes in finding a floor.

--- The New York Stock Exchange composite index and the Russell 2,000 small-stock index today fell very close to their Oct. 10 intraday lows but didn’t drop below them.

Steve Todd, editor of the Todd Market Forecast newsletter in Crestline, Calif., said that he was ‘not surprised by a severe test of the recent lows, but we really need to hold here. Too many retests are normally not a good thing.’