By Paul Cherney This is the week of the quarterly expiration of futures (formerly known as the Triple Witch).
Friday's of the quarterly expirations usually see a huge wave of volume at the open and markets trade in one direction for 20 to as many as 40 minutes and then prices usually retrace a little of the opening move and spend most of the day moving sideways. Sometimes, if there is a directional move lower that lasts until the New York lunch hour, the markets (on a Triple Witch) can simply run out of sellers and reverse off the lows and spend the afternoon moving higher.
The reality of Thursday's session was that prices were unable to attract buyers at higher levels. Not really a healthy condition, but not a death knell either. I think this is more evidence that a short-term topping pattern may be developing, but this might turn out to be only a consolidation pattern because even though end-of-day measures are weakening, momentum measures on price and volume have not deteriorated to levels that shift the odds to favor a short-term trend lower.
The CBOE volatility index, or VXO, started to move lower but it is probably going to have to trend below the 14.17 level to suggest that some panicked buying can come into the market.
support is 1,896-1,876 then 1,868-1,840. On Friday, if prices move below 1,892.00 for more than 4 minutes without attracting buying interest to move prices higher, then, immediate intraday downside risk for prints 1,883 and lower will increase.
S&P 500 support is 1,123-1,117, which overlaps 1,118-1,113, making the 1,118-1,117 area a focus of support. Next support is 1,110-1,094.
The S&P 500 is testing immediate
resistance at 1,123-1,130.33. This year's June price action established more formidable resistance in the 1,129-1,146.34 area with a focus of resistance 1,132-1,140.
Immediate resistance for the Nasdaq is a small shelf 1,901.77-1,910 but then better defined (stronger) resistance is 1,912-1,933.03, resistance thickens with prints of 1,919 and higher. The next area of well-defined resistance is prints of 1,960 and higher.
In Thursday's session I was unable to find a release for the semiconductor book-to-bill ratio.
FYI, the old saying on the street used to be "SELL Rosh Hashanah, BUY Yom Kippur." Arthur A. Merrill, in his classic book Behavior of Prices on Wall Street, did a study of this particular saying to see if it carried any statistical significance. His book was copyrighted in 1984, the saying had no significant value at the time of printing of his book. I don't remember the number of years he used in the sample but I do remember that the market lost ground 54% of the time and gained ground 46% of the time (between Rosh Hashanah and Yom Kippur).
Rosh Hashanah began at sundown on Thursday, Sept. 15. Yom Kippur begins at sundown Friday, Sept. 24. Cherney is chief market analyst for Standard & Poor's