By Paul Cherney
Monday's markets produced small total trading volumes. It is generally viewed as a positive when the markets retrace on light volume, but the reality I ascribe to Monday's session is that neither buyers nor sellers care to act aggressively. These markets are waiting for a headline to inspire action.
The Nasdaq has a focus of resistance (intraday) at 1,999-2,004.69.
The S&P 500 has a small shelf of resistance at 1,183.75-1,185.84. These are intraday resistances, but if they are exceeded, it would a positive intraday step for prices.
However, without clear and strong proof that buyers are coming into the market aggressively, I think the markets remain vulnerable to a slow-motion slide lower. Immediately, a test of Nasdaq 1,986-1,968, and S&P 500 1,173 can unfold in the absence of a headline to inspire buyers. This scenario has no time frame.
Some of the caution to make a commitment on Monday might have been out of concern that the FOMC might have hinted at a 50 basis point rate hike during their Mar. 22 meeting. The minutes from that meeting are due to be released on Tuesday at 2:00 p.m. ET. I think it is unlikely that the Fed would make a 50 basis point move unless they telegraphed it well in advance.
Whenever support is undercut it must be viewed as resistance until proven otherwise. Whenever resistance is exceeded it must be viewed as support until proven otherwise.
The Nasdaq is back inside its 2,017.66-1,968.58 trading range, and if it moves under the 1,968 level that could trigger a day of selling.
Technically, the S&P 500 never left its trading range. The range is 1,193.28-1,163.69. Immediate support for the S&P 500 is 1,179-1,163.69. The S&P 500 has a concentration of support at 1,169-1,163. Under 1,163, the next layer of support is 1,147-1,120, inside 1,147-1,120 there is a focus of support at 1,142-1,131. It would take a close above the 1,193.28 level to increase the chances for additional upside, but a move above that level would have to generate strong volume, too.
The Nasdaq has resistance at 1,999-2,008 and 2,017-2,027; resistance in this area thickens with prints of 2,023.00 and higher. Next resistance is 2,036-2,059 and 2,047-2,069.42, which makes the 2,047-2,059 area a focus of resistance. Additional resistances are directly over the 2,069 level at 2,078-2,093.68 and 2,101-2,111.43.
These markets have to prove themselves by delivering convincing volume on advances.
Cherney is chief market analyst for Standard & Poor's