Paul Cherney We are nearing the end of the month and there are multiple factors that can push and shove the markets. About the only aspect of the markets I feel confident in writing is that we are near a bottom, and there is limited downside, but I don't have enough tehcnical evidence to suggest that the lowest prints are in yet.
I have weekly indicators based on the S&P 500 that are at oversold levels seen at or near major lows over the past 14 years. The last time these weekly indicators (which combine price change with volume measures) hit their current levels were September 2001, March 2001, October 1990 and December 1987. Because this indicator is based on weekly data, it will not pinpoint to the day of the turn, but we are within only a few trade days of a low and this should launch higher prices. In reviewing daily price action near these excessively oversold readings, I know that there can be some volatility and choppy up and down action, and we have certainly seen that.
Wednesday's intraday price action was volatile, but it did see the Nasdaq finish in positive territory. That should be a positive at least for morning trading on Thursday.
If the VIX can drop under 30.12 intraday, it should coincide with a rebound in prices. It would be more important for the VIX to close below 30.12 to suggest that a turn is in the making.
The Nasdaq has immediate resistance 1449 to 1491, with a focus 1480-1486. The next resistance is 1519-1538.36 then 1554-1595 with a focus of resistance 1560-1570. The next thick resistance (above 1595) is 1620-1654.
The S&P 500 has immediate resistance of 987-1005.58 then 1010-1019 then 1025.93-1039.09. There is a focus of resistance 1032-1037.80. There is thick price traffic 1039-1047. The next resistance is 1065-1088.
Immediate Nasdaq support is 1414-1394 then 1402-1375, which makes the 1402-1394 area a focus of support. I have looked at long-term charts for the Nasdaq and the 1380-1200 area looks like a solid band of support, which will act as a floor for prices during the current decline. (The 1380-1200 layer is from the years 1996-1997.) I do not think the index (even if it sold off horribly) could manage more than one close below 1387.
Immediate intraday support for the S&P 500 is 960-952 and the entire price range from Sept. 21, 2001, which means there is support down to 944. I do not think the S&P 500 could have more than one close below 944.75. I have looked at long-term charts of the S&P 500 and we are at the level 960-926 (from late 1997), and this should act as a floor for the current decline.
The Sept. 21, 2001 price ranges were: S&P 500 intraday high 984.54, intraday low 944.75, close 965.80. Nasdaq intraday high 1454.04, intraday low 1387.06, close 1423.19. Paul Cherney is chief market analyst for Standard & Poor's