By Paul Cherney
The line of least resistance should still be for higher prices for another 10 trade days. The momentum generated by the lift off the 4/4/01 bottom should still have some residual (positive) effects on prices.
Immediate resistance for the Nasdaq is 2039-2096 with a focus 2052-2078, resistance actually runs all the way through 2111. The index has another layer of resistance 2143-2182.
The Nasdaq finished Tuesday's session in a test of the 2030-1995 area of support. The next substantial layer of support (based on the charts) is 1962-1868. I cannot rule out a retracement in the Nasdaq which prints in the 1962-1868 area. We just had a fourth consecutive rate cut by the Fed. Historical odds based on price performance in the wake of a fourth rate cut by the Fed puts downside risk (over the next year) for the Nasdaq for a close of 1875.
The S&P 500 now has immediate resistance in the 1223-1238 area. The index has immediate resistance in the 1253-1273 area. The index finished Tuesday's session in a test of support in the 1212-1202 the next support is 1193-1158. My "worst case" expectation for this retracement is a close near 1168. Historical odds based on price performance in the wake of a fourth rate cut by the Fed puts downside risk (over the next year) at a close of 1140.
Cherney is Market Analyst for Standard & Poor's