By Paul Cherney
The Federal Open Market Committee meets on Wednesday and the Street expects a 25 basis-point rate hike in the Fed funds target. If anything else were to happen, that would be a surprise. The markets do not like surprises.
Nothing much has changed technically since Monday's comment. The markets are consolidating the run-up of the past two weeks.
Longer-term measures of daily momentum have already reached levels that keep the odds tilted to expect that any short-term weakness will attract buyers (but weakness/consolidation can last more than a single trade day). When I see configurations of end of day indicators like those in place now, unless/until other technical measures signal differently, I expect prices to ultimately rebound from any short-term weakness and close at higher levels than we have seen already.
The NASDAQ is testing a broad band of resistance 1960-2055. The next resistance for the NASDAQ is 2049-2094, this overlaps the 1960-2055 resistance and that makes the 2049-2055 area another focus of resistance. Tuesday's intraday high was 2049.77, right in the focus of resistance.
Immediate intraday NASDAQ support is 2036.99-2025.71 with a focus 2033.42-2027.69.
S&P 500 intraday support: 1163-1160.52.
Immediate NASDAQ intraday resistance is 2043.36-2046.92. When resistance is exceeded, it must be considered support until broken.
S&P 500 intraday resistance 1168.23-1170.87.
The S&P 500 has daily price bar resistance 1151-1176.97. Next resistance is thick 1185-1226.
Immediate supports (daily chart) for the S&P 500 are 1163-1147 and 1150-1127, that makes the 1150-1147 area a focus of support.
The NASDAQ has immediate support 2025-2016 and 2008-1992.
A close below S&P 500 1127 and/or NASDAQ 1992 would be contrary to the price patterns I associate with the current technical condition of the market (In other words: I think I would be wrong about even higher prices in the near-term if there is an S&P 500 close under 1127 and/or a NASDAQ close below 1992.) Price weakness that sees the S&P 500 test 1150-1142 and/or the NASDAQ testing 2025-2016 or lower cannot be ruled out and would be perfectly natural after the kind of break higher these markets have just experienced.
We are at the beginning of what has been historically, on average, the 3 best performing months of the year -- November through January.
Cherney is chief market analyst for Standard & Poor's