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Waiting on Greenspan

By Paul Cherney Please note: Paul Cherney's column will not be published on Tuesday, August 13. It will return on Wedensday, August 14.

Historical studies based on the VIX (market volatility index) suggest higher prices should unfold inside this week.

This is options expiration week and this event can lend its own special degree of volatility to a market which is rife with volatile trade already.

Tuesday could bring more sideways price action. I do not think the Fed is going to cut rates, but the markets have the potential to move higher in reaction to the statement which accompanies the announcement.

After the Announcement: Over the past few years, quite often, the first move in reaction to the Fed's announcement proves to be the direction for prices as they end the trade day, but, the first move usually reverses (intraday) and then, when the counter move runs out of momentum, prices usually resume traveling in the direction of the initial reaction to the announcmeent. Unless there are headlines which warrant long-term respect (in relation to an impact on the markets), Tuesday's afternoon reaction might be completely undone by the close on Wednesday.

The Nasdaq's next layer of resistance is 1312-1354. Resistance gets thick with prints of 1335 and higher. Immediate support is now 1299-1286 then 1281-1263.

The S&P 500 is near the top a layer of resistance which runs 885-911.63. The index has thick resistance 918-934. Immediate support is now 901-890 and 888-883. Cherney is chief market analyst for Standard & Poor's

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