By Paul Cherney
The markets appear to have embraced the notion that the economy is strong and earnings reporting season should be good. This is just about a 180 degree turn from the concerns that strength in the economy would cause the Fed to maintain its tightening policy.
Early this week, high crude prices weighed on stocks, but if the storm in the Gulf of Mexico passes without much damage to platforms or production then speculation in the crude markets should turn prices lower, which I would view as a short-term plus for equity prices.
Friday's technical developments were positive and downside looks limited. Expecting a positive tone for equity prices.
Energy stocks have started to see some profit-taking and if prices for oil continue lower, the energy sector could weigh on the S&P 500, possibly muting its participation on the upside, but if the new-found embracement of strength in the economy as "good" thing for stock prices is for real, then moves back into cyclicals and economically sensitive stocks should keep prices moving higher.
The next Nasdaq resistance is 2121-2191 with layers of resistance at 2126-2169 and 2134-2154.
S&P 500 immediate resistance is 1212-1219.10, then 1221-1229.11.
Immediate support for the Nasdaq is 2106-2085, then 2078-2064.
Immediate support for the S&P 500 is 1206-1199, then 1194-1183.
Cherney is president of Cherney Market Analysis