By Paul Cherney
After reviewing the intermediate term indicators (60 minute price bars) for the Nasdaq, I have these observations: the Nasdaq's indicators are at levels which usually indicate another day (6 trading hours) of net positive action (higher prices). These signals came near 2:30 pm EST on Monday, so the historical odds favor higher prices until about 2:00pm EST on Tuesday. For the Nasdaq, since the beginning of October, 2001, this set of indicators (based on price and volume action inside 60 minute price bars) has issued signals 11 times, seven times correctly predicting another six trading hours of net positive, three signals preceded sideways small range trading, one time was a failure and the market moved lower.
Seven out of 11 is 64% of the time. If you include the three times that the market didn't really go up or down, odds have been 10 out of 11 (91%) that the Nasdaq drifts sideways or higher.
The next intraday layer of Nasdaq resistance is at 1777-1791.
There is a gap in the price chart which was created by the downside opening on Feb. 19, 2002. That gap is 1791.01 to 1801.67. Considering the intermediate term indications of continued strength (from the 60 minute bars) I think this gap should get filled in tomorrow's (Tuesday's) price action. Nasdaq resistance above the 1803 level becomes thick at 1820-1847. I think any print above the gap (Nasdaq prints above 1803) will bring sellers to the market in Tuesday's session.
The Nasdaq has a well defined band of intraday support at 1752-1734; there is a focus of support inside this band at 1747-1740.
The S&P 500 has well defined intraday support at 1102-1093. The S&P 500 has thick resistance at 1116-1139.50 with a focus of resistance at 1126-1130.
Cherney is market analyst for Standard & Poor's