By Paul Cherney
On a purely technical level: sideways to lower prices remain the most likely course for the markets in the short-term (could be over on Wednesday, but also could last as many as 4 more trade days). For Wednesday, early weakness might inspire some short-term short-covering.
The markets remain highly susceptible to adverse headlines.
Immediate S&P 500 resistance is 1060-1072 with a focus 1062-1066, the next layer of resistance is stacked in the 1073-1096.94 area with a focus of resistance 1085-1096.
The S&P 500 closed Tuesday's session in a test of the thin shelf of support 1059-1056. After reviewing intraday charts I am adjusting price levels for the more substantial support: buying support should come in with prints 1050-1026, within this band of support there is a focus of support 1042-1034. I think the first move (if we see one) below 1050 should bring some buyers to the market for a short-lived bounce (maybe just intraday).
The Nasdaq finished Tuesday's session in a test of the shelf of support: 1586-1563 but spent most of the session meandering inside the focus of support which was 1581-1573 (intraday), this now is the first layer of intraday resistance. The next layer of support is 1568-1545. More substantial support is 1528-1458 with a focus 1503-1472. The index has a brick wall of resistance in the 1584-1605 area which has been capping closes.
With the meat of the earnings reporting season right around the corner it is difficult to fathom how the market can move appreciably higher, but until I receive a truly negative technical readings, I will maintain my expectation that the DJIA will close above 9400 before this upleg is over, (before the end of October).
Cherney is market analyst for Standard & Poor's