By Paul Cherney Friday is options expiration. Quite often, most of the
sound and fury has already taken place before the
expiration day. An opening surge in volume and a lift in
prices might not find much in the way of followthrough.
At this time I don't think the markets can establish an
advance which just keeps going and going without looking
back because there are still too many valuation concerns
which should keep some conservative money on the
sidelines. The Fed has already made it's fifth rate cut,
the historical records are clear; at the one year
anniversary of a fifth rate cut, neither the NASDAQ nor the
S&P 500 have ever closed lower than they were on the day of
that fifth rate cut, so with a one year time horizon, the
downside is limited, too.
Immediate support for the NASDAQ is now 2171-2156 then
2125-2109. The NASDAQ has established a well-defined wall
of resistance in the 2187-2233 area. This is part of the
broader band of resistance in the 2174-2233 area. The next
layer of resistance above 2233 is directly overhead in the
2242-2356 with a focus of resistance 2253-2310. Unless
there is a headline of undeniably bullish importance, I
think that the best the NASDAQ can do on this short-term
advance (the next couple of trade days) is a print at or
above the 2233 level. Downside is limited.
The S&P 500 has immediate closing support in the
1273-1253 area. There is a small shelf of resistance in the
1288 area, which is where the index closed on Thursday. The
next substantial resistance does not occur until 1300-1341.
A likely spot (short-term) for this initial leg up to run
out of momentum is prints in the 1311-1339 area. Cherney is Market Analyst for Standard & Poor's