By Paul Cherney
Price and volume in Wednesday's markets have bolstered confidence in my expectations that this upleg in the markets will not start to lose momentum until after the DJIA has had a close over 9400 (sometime before the end of October probably very soon).
In Tuesday's overnight systems run I had 4 minor signals for weaker prices, but when the expected does not occur (we went up on Wednesday, not down), then that usually means there is followthrough (higher).
Former resistance levels are now supports.
Immediate S&P 500 support is 1072-1052 with a focus 1067-1052.70. The index finished Wednesday's session in a test of the 1073-1096.94 area of resistance, after reviewing charts I think the index will have a close in or above the focus of resistance which is 1086.93-1096.94 (which represents part of the trading range from Sept. 10, 2001). The next layer of resistance above the 1097 level is 1114-1135.52.
The S&P 500 has substantial buying support at 1050-1026. Within this band of support there is a focus of support at 1042-1034.
The Nasdaq has a layer of resistance 1618-1642. A move above 1642 would probably prompt some more short-covering and momentum buying. The Nasdaq should have a close in the next area of resistance (above 1642) which would be 1669.94-1770.76 sometime before the end of October.
Immediate NASDAQ support is now the former brick wall of resistance which is 1605-1584, support actually runs all the way down to 1558.
We all know that the markets remain highly susceptible to adverse headlines.
Cherney is market analyst for Standard & Poor's