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Stage Is Set for More Gains

By Paul Cherney There are so many people short of stocks in the current market that additionally higher prices could force more people to "buy to cover" open short positions. With many of my indicators in positive positions and in light of the recent chart action in the Nasdaq in which an important price level was tested and retested bringing buyers to the market, I think you have to give the benefit of the doubt to the realization that higher prices should unfold.

I don't think this can be the beginning of a "never look back" protracted run, but on balance, the technical picture can support a further advance, it might only be gains in 2 of the next 3 trade days, but higher prices could unfold.

The Nasdaq has defined the 1944-1934 area as important support. After reviewing Nasdaq prices from Apr. 11-17 of this year (when the Nasdaq was powering out of the Apr. 4 low), I think the shelf of support established in the 1944-1891 level is considerable and should support price. so even if the Nasdaq moves below the 1934 level, additional downside should be limited.

Immediate Nasdaq support is now 1995-1963.

The Nasdaq has immediate resistance 2021-2047. Additional resistance is 2069-2105 with a focus 2069-2083. The next resistance is a brick wall at 2137-2181.05.

The S&P 500 has immediate support 1184-1174. Resistance is 1196-2025 with a focus 1207-1216. (There is a brick wall of resistance in the 1227-1242 area.) Cherney is Market Analyst for Standard & Poor's

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