By Paul Cherney
The markets are still stuck in trading ranges, but it looks like the NASDAQ might be headed for a retest of the recent low (1991.05). The weakness in the NASDAQ is being caused by a rotation out of the NASDAQ high techs and this move lower might have been helped along by Intel's (INTC ) lowered revenue guidance last week.
The trading ranges based on end of day data look like this:
S&P 500 top of the range is 1163.23 (Friday's intraday high), the bottom of the range is 1122.38.
The NASDAQ's recently established trading range: top 2094.92, bottom of the range 1991.05.
Immediate NASDAQ support is 2014-2005. The bigger band of support is 2001-1783, established over the months of October, November, and December. The upper edge of this band of support is especially thick with price action. There are small shelves of support scattered through the upper edge of this band but the chart starts to get well-defined support 1994-1959 and the 1982-1970 area looks like a likely spot (if prices move there) for some shorts to cover and some sort of a rebound to unfold.
Immediate support for the S&P 500 is 1147-1138.62, there is a focus of support 1147-1141.80 area a focus of support. Next support is 1129-1124.
The VXO is no longer below its 10-day exponential moving average, which is a background negative for prices and remains that way unless the VXO stops moving higher and reverses to start closing the gap between itself and its 10-day exponential moving average. Very near the end of trading on Monday, the 10-day exponential moving average of the VXO was 14.99.
Usually, if the VXO moves above it's 10-day exponential and puts distance between itself and the 10-day exponential, equity prices are suffering. Sometimes in a market like this, prices have a brief, shallow shakeout, but buyers come back in on the dip and prices return to the center area of the trading range.
NASDAQ immediate chart resistance is 2012-2024, then 2032-2045, then 2049-2064.40, then 2072-2094.92. This resistance actually goes all the way to 2102, there is a focus of resistance 2072-2091. Next resistance above 2102 is 2108-2153.83. The NASDAQ did print above 2064.40, but it could not generate followthrough.
The S&P 500 has a band of resistance 1149-1176.97 with a layer of resistance inside this zone at 1149-1158.98. I have reviewed charts from March of 2002 and there is a well-defined layer of resistance for the S&P 500 at 1166.27-1173.94.
Cherney is chief market analyst for Standard & Poor's