By Paul Cherney Volume is a little questionable right now because the higher prices are not attracting more and more people (volume) to the party. But right now, the prices are rising, not falling, and the volume might catch up. These markets probably need a bullish headline to propel prices signficantly higher. But both the Nasdaq composite index and the S&P 500 index are right at significant
resistance levels, which, if exceeded, could trigger a small but lively wave of buying that lasts for a couple of trading days.
End of day momentum measures are neutral, with a positive bias. These are not strong readings, but they have a positive bias, not a negative one.
Immediate resistance for the Nasdaq is substantial (many days) at 2,068-2,111.43, with a focus at 2,078-2,092 (revised from Thursday's end of day comment). One of the big problems with the Nasdaq's attempts to move higher earlier in February was that while prices had moved higher, there was no technical evidence of a stampede of aggressive buyers. The current short-term lift might suffer the same fate (failure to follow through) so, I will need to see a day or two when up volume swamps down volume to suggest that this lift is something more than just an energetic lift fueled by short-covering and short-term momentum players. Bigger volume would increase the chances that investors, whose time horizons are greater than "intraday" or just "a few trading days," have taken an interest in putting money to work on the long side.
For the S&P 500, immediate resistance is 1,212-1,217.90. Resistances are stacked and overlapped at 1,215-1,226.27, making the 1,215-1,217.90 area a focus of resistance.
The S&P 500 has immediate
support at 1,206-1,197. Next support is 1,190-1,184.16. If there is a retracement that undercuts 1,184.16 that would be a big negative and I would expect follow-through lower. S&P 500 1,184.16 was the low and close on Tuesday, Feb. 22. On the daily charts there is S&P 500 support at 1,184-1,160, inside this support are shelves. The biggest support looks like 1,178-1,163. Next support is 1,142-1,090.
The Nasdaq has immediate support at 2,055-2,036, with thick support at 2,047-2,036. A move below this level would be a short-term negative. If there were a move below 2,023.00 it would be a negative, too.
The 30-day exponential moving average of the VXO was 12.11 near the close of trading on Friday. VXO prints above this level would probably coincide with negative price action in equities.
Anytime supports are undercut they convert to resistance until broken. Anytime resistances are exceeded, they convert to supports until proven otherwise. Cherney is chief market analyst for Standard & Poor's