By Paul Cherney
I have no clear idea of what could happen in Friday's market. Certainly, the price movements of the past two trading days have taken some of Friday's potential thunder away. Usually, option expiration sees a burst of volume at the open and prices move, but then settle down for most of the rest of the session. With a three-day weekend looming, the index could become subject to some volatility in the last 90 minutes of trading.
Late day weakness in the NASDAQ raises questions as to the NASDAQ's ability to add significantly to Thursday's gains. One of my models is suggesting that a gain at the open would not last more than about 30 minutes and that a slow-motion drift lower (for the rest of the day) could follow, but I have no clear idea of what will happen in the NASDAQ.
Odds favor another positive close for the S&P 500, but just that, positive, not a substantial gain on the day.
I don't think the NASDAQ is ready to trend higher and I remain concerned that there is still a good possibility of a hard down move, which pushes the CBOE's total Put/Call ratio to over 0.99 at its end-of-day reading. (This doesn't mean Friday, just someday before we can see a consistent trend higher.)
The NASDAQ is testing thick resistance (closing basis) in the 2523-2555 area, the next layer of resistance is 2591-2706 with a focus 2627-2652 (not likely in Friday's market). Immediate support (below 2523) is 2491-2462. Additional support is 2447-2417.
The S&P 500 has immediate support in the 1322-1311 area. This focus is within a broader area of support, which is 1329-1301. Immediate S&P 500 resistance is 1332-1339 then MAJOR, brick wall resistance is 1351-1389 with a focus in the 1353-1368 area.
Cherney is market analyst for Standard & Poor's