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A One-Day Wonder?

By Paul Cherney Chances are good for a one-day wonder on Thursday. Wednesday's markets put prices right at the levels which look like likely spots for some sort of profit-taking by bears (buying to cover outstanding shorts), which should attract some short-term momentum players -- and a day of higher closes can easily unfold.

The S&P 500 is inside the 1,015-1,008 focus of support, and the Nasdaq is inside support at 1,825-1,799.

If the indexes gain ground on cheap volume on Thursday, it would not be the healthiest of conditions for the markets and some sideways and lower price action could follow over the next few trade days.

The Nasdaq has immediate

resistance at 1,850-1,858.67 then 1,874-1,893, this layer of resistance is based on intraday trading (60-minute bars) from March 18 and 19 of 2002. The further back in time you go, the less important short-term intraday price ranges become but this market has not moved above the 1,893 level intraday.

The Nasdaq has a price gap created by the opening on Mar. 12, 2002. These are hourly charts and the gap runs 1,899.01-1,928.12. Quite often, the first test of a price gap brings sellers to the markets.

S&P 500 resistance (daily bar charts) was established by price action in June, 2002; it is 1,008-1,041, with a focus at 1,020-1,031. The index has been unable to close above the 1,031 level. The next resistance is big at 1,048-1,107, from March, 2002. Two different measures of the potential upside for the current break above the 1,015 level target 1,047 and 1,070 as potential upside prints.

Immediate intraday resistance for the S&P 500 is 1,015.87-1,021.51.


support for the S&P 500 is 1,015-988, with a focus at 1,015-1,008. In the short-term, I expect this first drop to prints below 1,015 to attract some buyers, but if a bounce does not attract volume, it could mean that investors are more content to sit back and wait for robust guidance during the beginning stages of this earnings "confessional" season.

On a pure chart basis, the Nasdaq's breakout of its trading range has created the potential for a test of 1,912-1,954, The S&P 500 has the potential to print 1,047-1,070. There is no time frame for these potential moves. Cherney is chief market analyst for Standard & Poor's

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