By Paul Cherney
The price action on Friday, Apr. 2, improved momentum indicators which measure price combined with volume; they are positive and until that changes, assume a positive trend for prices. That does not mean that every single day is a gainer.
One of the limiting factors in Friday's market (limiting index upside, especially for the S&P 500) was the profit-taking declines in the interest rate sensitive stocks (financials, homebuilders, etc.). It is possible that when these groups become short-term oversold, a rebound in their prices combined with continued buying in the cyclicals and techs (and small caps of the broader market) could produce a good couple of days higher sometime next week.
The S&P 500 has immediate support at 1,135.67-1,129.94, then 1,125-1,113. Next support is 1,101-1,087.06. Substantial, well-defined support is 1,077-1,031.
Immediate Nasdaq support is 2,036-2,011; there is a focus at 2,036-2,024. The index created a gap in the price chart with Friday morning's vault higher. The gap is 2,037.19-2,019.09. The index has a well defined shelf of support in the end-of-day charts at 2,019-1,960.
The S&P 500 is in a test of resistance at 1,135-1,149, with a focus at 1,138-1,146.65. Anytime resistances are exceeded they must be treated as support until proven otherwise. The S&P 500 has a band of resistance at 1,149-1,176.97, with a layer of resistance inside this zone at 1,149-1,158.98. I have reviewed charts from March, 2002, and there is a well-defined layer of resistance for the S&P 500 at 1,166.27-1,173.94.
Immediate Nasdaq resistance becomes thick at 2,049-2,064.40. Next organized resistance is 2,072-2,102. This resistance has a focus at 2,072-2,091. Next resistance above 2102 is 2,108-2,153.83.
Cherney is chief market analyst for Standard & Poor's