By Paul Cherney
As of 4:00 pm EST, the CBOE's Total Put/Call ratio was 0.87. The Equity Only P/C ratio was 0.79. I generally view any Equity Only P/C ratio over 0.75 as an indication that we are within a day (maybe two) of a good tradeable low. I would like to see a Total Put/Call ratio greater than 1.00 but few things in the world are perfect.
During the final 90 minutes of trading on Friday, indicators that combine price and volume for the NASDAQ started to assume positive formations. Yes, there is a chance that they could just turn lower on Tuesday, but for right now I have to interpret them as short-term positive.
The chances are good that we might only see weakness pre-noon on Tuesday before some unwinding of Friday's bearish action takes control of the markets (and causes buying).
There is a good possibility that the NASDAQ sees only 20 to 40 minutes of downside at Tuesday's open before buyers move in, but the price action (if anything to the upside unfolds) would represent only a short-covering rally, which can look exhilarating but usually only lasts one to four trade days, lately more like a day or a day and a half.
The NASDAQ finished Friday's session in a test of a layer of immediate support (2447-2417). The next layer of support is 2406-2376. If prices were to drop below 2376, the next layer of support is 2353-2291. Friday's intraday low swing was 2397.43. Immediate resistance is 2462-2493, and then thick resistance is in the 2523-2555 area.
The S&P 500 has immediate resistance in the 1311-1322 area. Immediate support is 1297-1293, supports are stacked and the next layer is 1293-1274.
Cherney is market analyst for Standard & Poor's