By Paul Cherney
Regardless of the techncial problems at the Nasdaq, here is the condition of the markets as I see it.
There is a positive bias in place for the equity markets. Which means I expect to see net gains for the beginning of July, but I do not think there can be an un-interrupted trend higher.
Next week, the July 4th holiday falls on a Wednesday, and the week has the potential to see total trading volume ebb. Friday, June 29, the last trading day of the second quarter, might be the biggest volume the markets see until the first full week of trading following the July 4th holiday. Markets will close early (1:00 pm EDT ) on Tuesday July 3.
In Thursday night's overnight systems run, an overbought signal popped up for the Nasdaq. This signal usually only sees one, possibly two days of higher prices before a period of digestion. (Friday was day one). Downside is usually limited and the retracements are usually only shallow (lasting anywhere from one to five trade days, with two or three days the most likely), and then there is usually another move higher which produces higher closes and it is at that point that concerns for the downside become a reality. This price and time scenario seems to fit in with the seasonal tendency for prices to see net gains into the middle of July.
The Nasdaq has resistance at 2120-2187. The next resistance is 2202-2330. Inside this area is a focus of resistance at 2210-2236 which looks formidable. There is a huge layer of support in the 2084-2017 area.
The S&P 500 has resistance in the 1219-1228 area. The next resistance is 1250-1316.
The "500" has well-established support in the 1212-1184 area.
Cherney is Market Analyst for Standard & Poor's