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The Need for Volume

By Paul Cherney Friday's price action put the NASDAQ right back into the trading range and wiped out Thursday's gains in the S&P 500, too. I was wrong about some additional upside and Friday's declines reinforce how important it is to see volume expand as price advances, because it was light volume on Thursday's advance that should have raised a bigger yellow flag of caution. The only advance worth following is one that attracts a crowd (volume) and that hasn't happened yet.

Here are the closest intraday supports and resistances for the NASDAQ and the S&P 500.

Immediate intraday resistance is S&P 500 1185.62-1188.05, NASDAQ 2006.08-2011.25.

Immediate intraday support for the S&P 500 is 1183.56-1177.68.

Immediate NASDAQ intraday support is 2002.35-1991.88. If the current decline moves under NASDAQ 1992.60, I would start to become concerned that more selling would be likely.

Whenever support is undercut it must be viewed as resistance until proven otherwise. Whenever resistance is exceeded it must viewed as support until proven otherwise.

The NASDAQ is back inside its 2017.66-1968.58 trading range, and if it moves under the 1968 level that could trigger a day of selling.

Technically, the S&P 500 never left its trading range. The range is 1193.28-1163.69. Immediate support for the S&P 500 is 1179-1163.69. The S&P 500 has a concentration of support 1169-1163. Under 1163, the next layer of support is 1147-1120, inside 1147-1120 there is a focus of support 1142-1131. It would take a close above the 1193.28 level to increase the chances for additional upside.

The NASDAQ has resistance 2017-2027, resistance in this area thickens with prints of 2023.00 and higher. Next resistance is 2036-2059 and 2047-2069.42 which makes the 2047-2059 area a focus of resistance. Additional resistances are directly over the 2069 level at 2078-2093.68and 2101-2111.43.

These markets have to prove themselves by delivering convincing volume on advances. Cherney is chief market analyst for Standard & Poor's

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