By Paul Cherney
Market sentiment is in a fragile state and prices are being held hostage by the next earnings announcement (good or bad).
Tuesday's session demonstrated a "type" of resilience in the marketplace, but this is the week of the Triple Witch and I'm sure there were some scared bears who had shorts in place or put contracts which expire on Friday who used Tuesday's opening drop to close out their positions and then that buying eventually created an intraday squeeze near 1:30 pm as prices for the Nasdaq broke above the intraday base established in the morning.
Intraday indicators registered levels late in Tuesday's session that suggest the markets should try to move higher again on Wednesday.
Earnings warning season remains the dominant theme (along with the Triple Witch) and there are few reasons for money managers to become overly aggressive in their buying.
This is the Triple Witch Week. Tuesday opened lower and then recouped losses by the close, we'll see if Wednesday opens higher and then settles back down.
I expect higher prices by the close, but nothing near the best levels of the session unless there is a "positive" earnings announcement/guidance in the tech sector. It still appears to me that the downside is limited.
The Nasdaq has immediate (intraday) resistance in the 2178-2189 area, then 2194-2221 then 2233-2253, resistance becomes thick in the 2263-2282 area.
The Nasdaq has a band of support 2167-2101, Tuesday's intraday low was 2105.26. there are two layers of support inside the 2167-2101 area: a focus of support 2167-2150 and the intraday base created in Tuesday's session which runs 2127-2105.
The S&P 500 has immediate resistance in the 1270-1287 area. The index is testing a band of support which was expanded by Tuesday's price action to 1265-1235.
Cherney is Market Analyst for Standard & Poor's