By Paul Cherney
Some consolidation of the recent gains would be perfectly natural at anytime. Tuesday's price action was healthy.
Some profit-taking on Wednesday would be perfectly natural, but it would not diminish expectations for additional gains based on the study of price action in the S&P 500 in the wake of excessive VIX readings (in Monday's end of day comment).
The NASDAQ is in resistance 1315-1350 with a focus 1326-1339. The next layer of resistance looks very thick 1365-1402. Immediate NASDAQ support is 1307-1290 then 1264-1251.
The S&P 500 finished Monday's session inside resistance which is 876-934 with a focus 895-909. This focus of resistance was established July 15 through July 18. The next resistance is 944-959.
The S&P 500 has immediate support 887-878 (this small ledge held on Tuesday). the index has considerable support in the 853-835 area.
This year's month of July (without even including the NYSE trade volume from today and tomorrow), will rate as the all-time highest monthly total volume in the NYSE's history. And it is going to do it by a long shot. Right now, (without today and tomorrow's volume included) the monthly volume total is close to 36.7 billion shares, the next two closest monthly volume totals are only 31.7 billion from June 2002 and 31.2 billion from October of 2001. I have to view this data as confirmation that we had a significant capitulation culminate last Wednesday.
Cherney is chief market analyst for Standard & Poor's