By Paul Cherney
Wednesday's markets did not deliver anything of use in terms of technical analysis because of the caution ahead of the FOMC announcement on Thursday. If I simply disregarded the caution ahead of Thursday's headline and offered a a purely technical opinion, it would be this: there was no follow-through to yesterday's oversold bounce, and that creates a negative bias.
But we all know that if the Fed delivers hints that it is ready to employ a moratorium for rate hikes, then prices should jump higher after the announcement. Once prices move above immediate resistances, they convert to supports.
The Fed has a habit of going one step beyond what is necessary. They have telegraphed 25 basis points for Thursday and that should be a "given."
On Thursday, prices might just move sideways until closer to the announcement.
Regarding Wednesday, I was wrong about the Nasdaq being able to hit 2077; the intraday high was only 2076.02.
Immediate resistance for the Nasdaq is 2077-2088; resistance is especially thick 2083-2085.04. Any positive price action that forces prices above the 2088.99 level converts 2088-2077 to immediate support.
If there is going to be a strong move up, then buyers have to show their eagerness to be owners by being aggressive and not allowing the Nasdaq to undercut immediate support at 2068.11-2057.48. I think 4 minutes of prints under 2057.48 would increase the chances for a drift lower in search of aggressive buyers; a move back below 2052 would be an invitation for prices to revisit 2047-2027. Why am I focusing so much on the Nasdaq? Because when the Nasdaq out-paces the S&P 500 on the upside, both indexes advance.
Immediate Intraday Resistances:
• Nasdaq: 2077-2088. Resistance is thick at 2083-2085.04. Next resistance is 2095-2106.57. Resistance is stacked and runs 2106.19-2116.75.
• S&P 500 resistance is 1206.95-1208.84, then 1211-1216.43.
• Nasdaq immediate support is 2068.11-2057.48. Next meaningful support is 2047-2027.
• S&P 500 support is 1200-1195, then 1194-1188.30.
Cherney is president of Cherney Market Analysis