By Paul Cherney
I think the markets have started a corrective move that can see the S&P 500 retest the 1206-1196 area and the Nasdaq at the least, the 2120 area. If these corrective moves occur, it will be the internal measures coincident with the lower price prints that might offer some insight as to whether there will be an extension deeper into the very strong supports: S&P 500 1206-1083, Nasdaq 2106-2039. At this point I tend to think that will be the case, but I will need to see additional break-downs in the internal measures.
AT 10:00 a.m. ET on Wednesday, the ISM services index for September will be released; the Street expects a reading of 59.7.
AT 10:30 a.m. ET the crude inventories report will be disseminated.
• The Nasdaq has resistance 2149-2167.00 focus 2153-2162.79 resistance is formidable 2177-2186.83.
• S&P 500 resistance is 1232.15-1236.49. The index has formidable resistance 1229-1242.62, the overlap represents a focus of resistance 1229-1236.49.
• The Nasdaq has a small, unorganized (not strong) ledge of support in the 2138-2137 area, but the next well-defined support does not come in until 2127-2109 with a focus of support 2122.66-2113.90. Prints below 2137.00 for more than 4 minutes would probably mean a test of 2132.60-2124.28, where prices might stall for a day or attempt a doomed rally before moving lower.
• Nasdaq major support is 2106-2039.
• The S&P 500 has immediate intraday support 1220-1211.20, with a focus 1218.20-1213.22. Prints below 1211.20 for more than 4 minutes without attracting buyers to lift prices would open the immediate intraday downside risk for prints 1206-1196.
• The S&P 500 has major support 1206-1165 with a focus of support 1206-1183. This is a very strong layer of support and is expected to hold if tested again.
Cherney is president of Cherney Market Analysis