By Paul Cherney I think downside risk is limited and there should be only a little more weakness, but then a labored move higher which should see the S&P 500 post a close in the 909-928 area of resistance.
The overnight systems run on Monday night produced an overbought signal, but it usually does not signal the end of the run-up in prices and a dramatic multiple week decline. It usually just means as few as one and possibly as many as three days of consolidation before an attempt to move higher again. There was so much momentum created in the recent lift from the Oct. 10 lows that there should be a residual positive effect.
Support: The S&P 500 has multiple stairsteps of support: 890-873, 877.51-866.14, 866.64-856.28, and 850-840. A move below 856.28 is still not expected.
Immediate Nasdaq support is 1287-1267, with a focus at 1279-1267, then 1256-1229, then 1244-1220, which makes the 1244-1229 area a focus of support.
Resistance: Immediate intraday resistance for the S&P 500 is 900.50-909.89. Next resistance is 909-928.
The Nasdaq has thick resistance at 1299-1347, with a focus at 1307-1327 There is a particularly congested area of prices at 1309-1316. This area looks like a ceiling for prices in the short-run and the first test of this area might bring short-term sellers to the market. Cherney is chief market analyst for Standard & Poor's