By Paul Cherney
The Nasdaq is ripe for short-term profit-taking and a consolidation of the recent gains.
For Friday, if the Nasdaq's open is a gap higher (something like a 1.75% to 3.00% jump for the opening print), it will probably prompt position traders (traders who hold positions for a few trade days) and day traders, to make the cash register ring (sell into strength).
That's one possible scenario. Another possible scenario is weakness at the open, a failed attempt at a rally and then lower prices.
Even though the overall trend is for higher prices, the Nasdaq appears ripe for some consolidation. The NASDAQ is up about 17% from its Jan 3, 2001 low of 2251.71. The Nasdaq is up about 14.8% from Monday's low print of 2299.65, somebody is going to want to take profits.
The intermediate term trend (the next couple of weeks) for the Nasdaq and the S&P 500 remains tilted in favor of higher prices, but the market is ripe for consolidation and short-term profit-taking on any day now.
The Nasdaq is currently inside the 2588-2645 area of resistance. A move above 2645 finds the next area of resistance 2676-2726 with a focus of resistance in the 2688-2711 area.
Immediate Nasdaq support (intraday) is now 2620-2604 and 2586-2550. I know the following price level is not going to make a lot of people happy, but at sometime over the next 2 trade days, the Nasdaq could drop to print in the next layer of support which is 2523-2482.
Cherney is Standard & Poor's Market Analyst