By Paul Cherney
The big question for the market is how much of the negative reaction to a negative Q3 GDP has already occurred? I don't know. But the S&P 500 is approaching very important price support and if the 1052 level breaks, a decline to the next layer of support is likely.
Preliminary Q3 GDP is due to be released Wednesday morning at 8:30 am EST. The Street is expecting -1.0%.
The S&P 500 has an important price support at 1052. A close below this level opens downside risk for a move to the next layer of support 1022-1000. That is a "close below" 1052. There is a good possibility that early weakness in Wednesday's session (if there is early weakness) could attract some buying interest and lift prices well above the worst levels of the session.
The S&P 500 has closing support in the 1062-1054 area.
Immediate S&P 500 resistance is 1075-1090 then 1101-1111.
The Nasdaq has resistance 1683-1695 then 1722-1754. The index is testing immediate support 1664-1628 with a focus 1657-1641. The Nasdaq has another layer of support 1626-1566 which should prevent prices from dropping. The chart of the S&P 500 looks a little more vulnerable than the Nasdaq's chart, this does not mean a bigger prercentage loss for the S&P 500, just that the potential that downside can occur looks more likely in the S&P 500's chart.
Cherney is market analyst for Standard & Poor's