Not Ready for Lift-off

The markets should try to work higher, but prices may struggle ahead of the earnings warnings season

By Paul Cherney

Paul Cherney's column will not be published on Wednesday, Mar. 20. It will return on Thursday, Mar. 21.

There are no major signals apparent in my work right now. Ultimately (because it was not a surprise), the news from the Fed will probably be viewed by the markets as a positive, and I think markets should try to work higher (S&P 1190-1206 and Nasdaq 1920-1942, probably before Mar. 28, the last trading day of the quarter). The earnings warning season represents a psychological weight on the market, but currently, there are enough technical indicators (for the broader markets) in positive positions to keep the positive bias for prices in place.

I can sum it up this way: Limited downside, I expect prices to struggle higher, but I do not expect a rocket shot.

Some caution ahead of the earnings warning season will probably prevent prices from making a strong break higher, but there still is a positive bias in place.

The Nasdaq has a layer of price action in the 1864-1875 area, which is acting like a pivot point. The next layer of resistance is well-defined at 1887-1899. Tuesday's intraday high was 1891.51. The resistance in the 1887-1899 area is from intraday charts, but charts based on end-of-day price bars show a band of resistance in the 1901-1960 area, with a focus 1908-1942.

Immediate support for the Nasdaq is well-organized in the 1853-1832 area. If prices were to print 1541-1532 (not expected right now) I think there would be a sharp rebound intraday, but the buying might only be shorts booking profits and probably won't have a lasting impact (maybe just the day).

The S&P 500 has a layer of support 1166-1154.

The S&P 500 has been caught in a band of intermediate term resistance which runs 1150-1177 (daily charts). Resistance (intraday) is 1169-1177. The next layer of resistance is 1190-1206. There is still an underlying positive bias in place.

Paul Cherney is the market analyst for Standard & Poor's

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