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A More Positive Tone

By Paul Cherney The VIX's (market volatility index) move back below its 10-day exponential moving average re-establishes a more positive tone for prices. On Monday, near the close, the VIX's 10-day exponential was near 31.50.

Because there might still be some unwinding of expiration-related positions, a negative close is still possible on Tuesday, but the markets have established a sideways consolidation from the last week in October until now which looks like it will support prices when tested.

Support: The S&P 500 has multiple stairsteps of support which makes a dramatic decline unlikely. Supports include 897-887, then 884-867. There is considerable price traffic (support) in the 883-875 area.

Immediate support for the Nasdaq is now 1393-1385, then 1375-1367 and 1347-1317.

Resistance: The S&P 500 has resistance at 932-965. Immediate intraday resistance is 915-926.27 and 932-944. The first move into the 915-926 area might run out of momentum without a headline of undeniably bullish importance to bolster confidence.

The Nasdaq has immediate resistance at 1381-1412, then 1407-1426, which makes the 1407-1412 area a focus of resistance. Due to the price action of Dec. 4 through Dec. 6 there is a well-defined ledge of resistance at 1411-1430.12, and this area will probably rebuff the first test (unless there is a headline of undeniably bullish importance). Higher prices by the first two trade days of the year seem very likely, but the first test of this area might cause a stutter in the Nasdaq. Cherney is chief market analyst for Standard & Poor's

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