By Paul Cherney
The day of reckoning is upon us. Friday, Apr. 2, brings the the much-anticipated March employment report. In order for the short-term uptrend in prices continue and move higher, it will probably take a nonfarm payrolls gain of at least 120,000, probably more like 150,000 or higher, to ignite buying and short-covering. If the nonfarms number disappoints, downside still looks limited but indigestion might put sellers in control for three to five trading days and immediate downside risk for losses of 2% to 5% could easily unfold.
Intermediate term indicators are neutral, but this is an improvement from the negative readings generated during the move down into the Mar. 24 low (for the S&P 500), so there is positive momentum in place.
The S&P 500 has immediate support at 1,125-1,113. Next support is 1,101-1,087.06, then substantial, well-defined support at 1,077-1,031, which is expected to hold if tested.
The S&P 500 has a small shelf of resistance at 1,129-1,133, but the next layer of well defined resistance is not until 1,135-1,149, with a focus at 1,138-1,146.65. Anytime resistances are exceeded they must treated as support until proven otherwise.
Immediate Nasdaq resistance becomes thick at 2,011-2,064. Inside this area of resistance there is a layer 2,019-2,044.68, with a focus at 2,024-2,036.
The following price levels carry some short-term significance because if they are undercut for more than 4 minutes intraday, without attracting buyers, I would interpret that as a sign that part of the buying fuel which forced prices higher has converted to profit-taking. These are the important immediate intraday support levels: S&P 500, 1,114.06-1,111.75; Nasdaq, 1,980-1,975.43.
Cherney is chief market analyst for Standard & Poor's