By Paul Cherney
The underlying trend for higher prices is running out of momentum, but it hasn't died yet.
The weakness in Friday's April Employment report has created well-founded expectations for a 50-basis-point rate cut by the Fed at the May 15th meeting. I think the markets are now in the process of discounting (moving higher in anticipation of) a 50-basis-point rate cut by the Fed. This should be the dominant theme next week thus creating a positive bias for equity prices. Once the rate cut comes, it could inspire some "sell on the news" profit-taking.
REMINDER: I would be very concerned about downside (next couple of weeks) if the Nasdaq were to close up on a day when the total share volume for the day was only about 1.66 billion shares.
The Nasdaq finished Friday's session in a test of resistance 2174-2233, the next layer of resistance is 2242-2356 with a focus of resistance 2253-2310. Immediate support remains 2169-2088. There is a focus of support 2137-2095.
The S&P 500 has immediate closing resistance in the 1253-1273 area. The next resistance is 1300-1341. Immediate support remains 1238-1223.
Cherney is Market Analyst for Standard & Poor's