By Paul Cherney
Friday looks like it could be a sideways session -- at lest historically. The odds favor little change by the close.
I looked back at quarterly data (price-only) performance for the S&P 500.
All of the following comments are based on S&P 500 quarterly data back to September of 1957.
There were 183 quarters in the study.
One of the calculations in the program was the price performance for the second to the last day of the quarter which, for this year would be Friday, June 27. Only 32 times out of 183 quarters (17% of the time) did prices close with a loss or a gain of 1.00% or more.
I calculated gains and losses for the very last trade of the quarters, too. Only 27 out of 183 showed a close with a loss or a gain of more than 1.00% for the day (that's about 15% of the time).
Right now, the S&P 500 is up about 15% for the quarter (with just a couple of trade days left to go). I filtered for quarters which had a 10.0% or greater advance at the end of each quarter. There were 21 quarters that met this filter. I then filtered for the performance in the S&P 500 in the quarter following quarters which finished with 10% or greater gains. Seventeen of those 21 quarters were followed by another quarter of gains, so 81% of the time, the S&P 500 managed to post an additional gain in the following quarter. The four losing quarters were the quarters ending 6/30/61 down 0.65%, 9/30/75 down 11.89%, 6/28/91 down 1.08%, and 3/28/02 down 0.06%.
The average of all gains plus losses in the quarters following 10% gaining quarters was a gain of 4.14%.
The 10-day exponential moving average of the VIX (market volatility index) was 22.35 very near the close of trading on Thursday. But for any price advance to command a sense of legitimacy, the VIX is probably going to have to remain below 21.91. Part of the fuel for the upside is probably coming from the liquidation of longsided (and wrongsided) put options which might have been used to protect quarterly gains.
Resistance: The S&P 500 has immediate intraday resistance at 984-995 and 993-1003, which makes 993-995 an especially thick area of resistance. Next resistance is 1010-1015.12. The bigger picture of resistance which was established by price action in June, 2002, is that the S&P 500 has a band of resistance at 1008-1041 with a focus of 1020-1031.
The Nasdaq has immediate intraday resistance at 1610-1620, then a shelf at 1623-1632.95. Additional layers of resistance are 1641-1660.47 and 1658-1669, which makes the 1658-1660.47 area especially strong resistance.
Support: The Nasdaq has support at 1620-1610, then 1603-1584.
Immediate intraday support for the S&P 500 is 982-972. There is a broad band of support at 973-947.
Cherney is chief market analyst for Standard & Poor's