By Paul Cherney
The trading ranges based on end of 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 was briefly undercut in Tuesday's session and buyers emerged after the index printed a low of 1987.29.
Usually, with the 60-minute indicator configurations I have seen, there should be another trade day or two which display jagged price action as the markets try to find their short-term footings, and that should unfold over the next few trade days. But Tuesday's intraday price action looked like a set-up for a "one day wonder," a day when short term selling pressures become exhausted and prices rebound to close with gains on the day. I typically like to see one last flush of selling at the open, but the late Tuesday action (lifting from the lows) suggests that short-term bears might be anxious to book short-sided profits.
Intraday CBOE Put/Call ratios were high (potentially bullish), which is also a promising sign for a rebound on Wednesday. As of 3:30 pm ET, the CBOE's Equity Only P/C ratio was 0.88 and the Total P/C ratio was 0.98.
Immediate NASDAQ support is a band 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. Next support is 1129-1124.
The VXO is no longer below its 10-day exponential moving average, which is usually a background negative for prices except that the VXO spiked up to 16.89 intraday on Tuesday and then started to head lower. Very near the end of trading on Tuesday, the 10-day exponential moving average of the VXO was 15.25. The intraday chart for the VXO suggests to my eye that if the VXO can move below 15.93, bulls will be gaining the upperhand. 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.
Immediate NASDAQ intraday resistance is 1994.92-2004.94. Anytime resistance levels are exceeded they have to be treated as support until broken.
Immediate intraday resistance for the S&P 500 is 1141-1146.05.
NASDAQ chart resistance above 2004.94 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