By Paul Cherney
Expectations for closes of 1,068 or higher for the S&P 500, and 1,988 for the Nasdaq -- both before Dec. 8 -- have weakened but have not become extinct.
At this point, I view the current price weakness as a retracement which will find buying support, and enjoy some sort of a bounce, but the most recent rise which peaked this past week did not push end-of-day momentum indicators to levels which would shift the odds to strongly favor that the bounce will rebound and run to new recovery highs.
In Friday's session, intraday measures of price combined with volume based on 60-minute charts hit deeply negative readings which increase the odds that even though we should get some sort of a short-term oversold bounce on Monday (as downside hedges associated with options are unwound), the bounce will probably not be able to garner significant follow-through, and usually there is at the least, another day of lower closes to follow, so we could see a small rebound in prices on Monday with closes above the open, but then lower again on Tuesday.
Immediate resistance for the Nasdaq is 1,930-1,943, then 1,937-1,966.87, with a focus at 1,945-1,959. The overlap of 1,937-1,943 represents the most immediate resistance of importance. On the intraday chart, immediate intraday resistance is 1,920-1,927.10.
Immediate resistance for the S&P 500 is 1,040-1,045.54, then 1,047-1,053.79, with a focus at 1,047-1,050.11. Next resistance above 1,050.11 is 1,068-1,106, with a focus at 1,068-1,090.
Immediate Nasdaq support is 1,917-1,905. On Monday, a little follow-through selling which pushes price to 1,910 or lower will probably attract buyers even if they might only be bears booking short-sided profits. The next stairstep of support for the Nasdaq (under 1,905) is 1,903-1,877, with a focus at 1,892-1,888.
The S&P 500 has immediate, multi-layered supports in the 1,040.64-1,026.19 area. I would expect that if there is a little more selling Monday morning, that prints of 1,035-1,026 will probably attract buyers.
Cherney is chief market analyst for Standard & Poor's