By Paul Cherney
Please note: Paul Cherney will be on vacation Thursday, July 3. His column will return Monday, July 7.
Obviously, the employment report will be the focus on Thursday, and will hold sway in the price action, but historically, the odds favor higher prices again.
The Street is expecting non-farm payrolls to be flat, so any increase is going to be a positive for equity prices.
The unemployment rate is expected to inch up 0.1% to 6.2% but this should not be a negative factor unless the number reported is huge.
Here are some historical observations based on S&P 500 prices and NYSE total trading volume for the years 1958 to 2002. I looked at only the last trading day before the Independence Day holiday.
The S&P 500 closed higher 29 out of 45 times, 64% of the time.
If you averaged all of the performances (winners and losers), the average was a gain of .21%.
Volume for the day averaged about .8 to .9 times the 50-day moving average of volume, which for this market would mean total trading volume on the day of about 1.16 billion to 1.31 billion.
There were only 8 times that the index managed to have a close which moved 1% or more in either direction.
The biggest closing loss occurred in 1991 with a loss of 1.10%.
The biggest closing gain occurred in 1980 with a gain of 1.54%.
Here is something which I found very interesting: We have just finished a second quarter in which the S&P 500 gained more than 10%. There were four other June ending quarters with gains in the S&P 500 of more than 10%; they occurred in 1968, 1975, 1980, and 1997. If you look at the last day of trading before the holiday for these dates, the S&P 500 gained every single time, and three of these occasions were gains of over 1%. The gains were: 1968, +1.17%; 1975, +0.19%; 1980, +1.54%; and 1997, +1.43%.
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 resistance at 1660-1711, then 1722-1748.
Support: The Nasdaq has support at 1666-1641, then 1633-1621; stacked support is 1617-1598.92, then 1603-1584, making 1603-1598.92 a focus.
Immediate intraday support for the S&P 500 is a small shelf at 990-984.80. Supports are stacked, with the next support at 982-972. Additional support is 970-960. There is a broad band of support at 973-947.
Longer-term support for the S&P 500 is 948-927, for the Nasdaq, 1558-1478.
Cherney is chief market analyst for Standard & Poor's