By Paul Cherney
Some consolidation of the recent gains would be perfectly natural at anytime. Wednesday's price action was healthy.
If some profit-taking does occur (profit-taking which lasts more than just intraday), 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).
Remember, these VIX studies are based on price action in the S&P 500, not the NASDAQ. In all likelihood the Nasdaq should participate in the upside also, but technically, the price performance percentages were based on S&P 500 daily closes.
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 has resistance 876-934. Wednesday's close was above the focus of resistance (895-909), so this price level now converts to immediate support. The next resistance is 944-959.
The S&P 500 has immediate support 909-895 then 887-878. The index has considerable support in the 853-835 area.
Cherney is chief market analyst for Standard & Poor's