By Paul Cherney
The technical condition of the markets is neutral with a positive bias, but significant upside is doubtful without a headline that can be universally recognized as being bullish.
The two day run higher (Monday and Tuesday) in the Nasdaq produced price momentum readings which usually have a lingering positive effect, so in the short-run, downside is probably limited, but upside will probably be a struggle. The price pattern of the past week has confirmed that there is buying support directly under current prices so prices might simply move sideways.
Resistance: The Nasdaq has immediate resistance at 1687-1723 with a focus at 1695-1703; Wednesday's intraday high for the Nasdaq was 1695.83. The Nasdaq has major resistance at 1722-1758. Inside this layer of resistance is a focus of resistance at 1737-1753. I think it would take a headline universally recognized as bullish to move prices above 1690 for a close higher than 1703. Apparently Wednesday's stronger than expected retail sales number was not enough of a headline.
Immediate resistance for the S&P 500 is 984-991. The S&P 500 has brick-wall resistance at 988-1015.41. Its focuses of resistance are 993-1000, 1005-1008, and 1010-1015. 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 at 1020-1031. If you look at the overlap of resistances, the 1008-1015 layer is a stumbling block for S&P 500 prices.
The average performance for the S&P 500 in a quarter following a 10%+ gaining quarter (which happened in June) has been a gain of 4%. A 4% gain from the S&P 500 price at the end of this year's June quarter would put the index at 1014.
Supports: The S&P 500 has support at 985-974 and 976-960.84. I cannot rule out that sometime before the middle of September that 949-912 support will be tested, but for right now, prices have stabilized and there is a positive bias in place. The S&P 500 still technically has a small chance of printing under 950. These markets have not seen a one-third or a 50% retracement for the move up since March's lows, and retracements like that are common, but in the short-term, prices have stabilized, and for now, it looks like prices should edge higher.
The Nasdaq has immediate support at 1676-1666, then 1652-1640 and 1643-1623; this is within the broader 1648-1597 layer of support.
Cherney is chief market analyst for Standard & Poor's