By Paul Cherney
Friday's end-of-day Nasdaq TRIN (an index combining both advance/decline and up-volume/down-volume indicators) was 3.403, while Tuesday's was 4.10. The sum of the two days' TRIN is roughly 7.50.
I ran a filter which pulled price performance on the trade day following a two day sum of Nasdaq TRIN which was greater than 6.5. There have only been six times since 1991 that this has occurred, odds are four in six (67%) that we will see the Nasdaq post a closing gain on the day (tomorrow, Wednesday). This is based only on this observation alone -- other conditions might have been factors in the previous dates -- but this is short-term excessive reading and some recoil in prices (even just for one day) is likely.
Here are the dates and the percentage change in the Nasdaq on the day after the two day sum of Nasdaq TRIN was greater than 6.5.
The Nasdaq has immediate resistance at 1763-1791, then 1818-1827, followed by 1841-1878. Immediate Nasdaq support is at 1760-1677, with a focus of 1740-1701. Nasdaq prints below 1740 will probably prompt bears to take profits by buying to cover outstanding short positions. Upside is likely but a shot into the stratosphere and an uninterrupted trend higher would be a big surprise to me with the current technical conditions.
The S&P 500 index has well defined intermediate term support in the 1111-1052 area. There is a focus of support inside this region at 1097-1080; below 1080, the next layer of support is 1075-1052.
The S&P 500 index has immediate resistance at 1087-1093, then 1101-1109.
Cherney is market analyst for Standard & Poor's