By Paul Cherney In the selling which hit the markets last week I only saw oversold readings in short-term price oscillators, none of the indicators I use which combine price with volume hit oversold levels. Neither did the breadth measures I watch, but there is a seasonal bias for positive price action in the second half of December and there has to be pressure on some money managers to show some of the stocks which have done so well up off the Sept. 21 lows.
The intraday price move in the Nasdaq above 1986 did not really generate the kind of short-squeeze which could have appeared.
This is the week of the Triple Witch (expiration of quarterly futures contracts, and the expiration of index options and the expiration of stock options), quite often what happens on Tuesday gets reversed on Wednesday.
With little technical evidence to the contrary, I am forced to assume that the price advance we saw in Monday's session represents an underlying positive bias for equity prices. The focus of resistance in the Nasdaq in the 2007-2023 area looks like a short-term magnet to me on the charts and a test of this area should occur sometime in the next two trade days.
The Nasdaq has intermediate term (a weekly view) brick wall resistance 1934-2106. Intermediate term resistance becomes thick with prints 2061-2106. More immediate resistance levels: Intraday charts show multiple resistance layers, here they are: 1995-2023, and overlapping 2007-2037 which makes the 2007-2023 area a focus of resistance.
The Nasdaq has well defined intermediate term chart support 1965-1853 with a focus 1942-1913. There is an immediate shelf of support created by the price action on Friday and Monday which is 1966-1948.
The S&P 500 has intermediate term "brick wall" resistance 1153-1206.
The S&P 500 finished Monday's session in immediate (intraday) resistance 1124-1142. The next concentration of resistance is 1139-1151.
The S&P 500 has substantial support 1111-1052 and it is doubtful that this level can be broken in a first test. Cherney is market analyst for Standard & Poor's