By Paul Cherney
I do not have overwhelming evidence for a definitive call in either direction for Wednesday's market. There is a positive bias in place for the Nasdaq.
It certainly appears to me that there is limited downside. There would have to be a headline to force a huge move in prices. Some digestion of today's gains appears likely as one of the 60-minute measures is at levels which often see a small drop in the morning but then a slow-paced recovery throughout the trade day, this is true for both the Nasdaq and the S&P 500.
CBOE Put/Call ratios look supportive of higher prices.
On a purely technical basis, a huge drop in prices does not seem likely due to the recent stairstep advance. Choppy, one day one way, one day another trading is very possible.
Immediate intraday support for the S&P 500 is 1,026.79-1,021.54 with a focus at 1,026-1,023.85, in addition, there is substantial short term support at 1,022.70-1,014.15.
The Nasdaq has immediate intraday support at 1,892.70-1,879.05, with a focus at 1,890.92-1,884.37. The Nasdaq has substantial support at 1,868-1,819 with a focus at 1,855-1,843.
Immediate S&P 500 resistance is 1,031-1,036.82. There is overlapping resistance established within the past four trading days at 1,034.52-1,040.29, which makes the 1,034.52-1,036.82 area a focus of resistance. Once resistance levels are exceeded, they convert to support.
Immediate Nasdaq resistance is 1,899.71-1,913.74. The index has small focus of resistance at 1,901-1,908. The Nasdaq hit a high of 1,913.74 at the open on expiration Friday, Sept. 19; if this level is exceeded, it might generate a some followthrough intraday.
I have reviewed intraday charts from the beginning of 2002 to try to refine resistance levels for the Nasdaq above the immediate resistance levels mentioned above.
Nasdaq resistance is 1,908-1,946.23 with a focus of resistance at 1,921-1,937. These resistance levels were established on March 8 and 11, 2002. There is another layer of Nasdaq intraday resistance established January 24 through January 29, 2002, at 1,925-1,957, which makes the 1,925-1,937 area an overlapping focus of resistance.
As mentioned previously, the Nasdaq's breakout of its June-July-August trading range has created the potential for a test of 1,912-1,954. Technically, with the recent print at 1,913.74, the lower edge of the measured move of the breakout has been satisfied. The Nasdaq 1,925-1,937 area looks like thick resistance.
S&P 500 resistance above current prices is 1,032.60-1,050, based on intraday price action from June, 2003. There is a focus of resistance at 1,035-1,041. The next resistance is big at 1,048-1,107, from March, 2002. There is another layer of resistance which overlaps at 1,068-1,107. Two different measures of the potential upside for the current bullish breakout above the 1,015 level target 1,047 and 1,070 as potential upside prints. The recent bullish breakout of the June-July-August consolidation has created the potential for a measured move to print 1,047-1,070. There is no time schedule for these potential moves.
All of the sideways trading range price action experienced in June July and August represents huge support for prices.
Cherney is chief market analyst for Standard & Poor's