By Paul Cherney In his testimony before the Senate, Federal Reserve Chairman Alaln Greenspan said the economy did not need stimulus to recover. The House passed the stimulus package. Fears that inflation could unfold down the road tanked the bond market but there was only minor weakness in stocks.
The momentum demonstrated over the past nine trade days usually has a lingering positive effect. Until I see technical evidence to the contrary, I think odds favor limited downside for the Nasdaq and the S&P 500. The line of least resistance is for higher prices.
The Nasdaq has a thin shelf of support at 1867-1857. The next band of intraday support is at 1852-1832. Under 1832, the next Nasdaq support is at 1803-1770 and I do not expect this level to be tested in Friday's session. The next layer of organized resistance (based on end of day charts) is 1901-1960, with a focus at 1915-1942.
The S&P 500 has a layer of support at 1152-1143. The index has more substantial support at 1127-1107, with a focus at 1127-1121. The "500" has been caught in a band of resistance which runs from 1150-1177. The next resistance above that is at 1190-1206.
Until I see something else techncially, I think (sometime in the next 11 trade days), the Nasdaq should be able to print 1915-1942 and the S&P 500 should get to 1190-1206. Cherney is market analyst for Standard & Poor's