Still a Chance for Upside
By Paul Cherney
In yesterday's comment I described the price pattern I would be looking for to potentially signal that there could be more on the upside. So far, the markets have not eliminated that possibility. I would prefer to see the current retracement in the Nasdaq establish closes above the 1702 level, but anything down to 1674 would be acceptable. For the S&P 500 I would (ideally) like to see the S&P 500 maintain closes above the 1121 level.
These are "ideal" recipes. If the Nasdaq or the S&P 500 undercut the lows in place but create a capitulation of sellers in the process then another shot higher fueled by short-covering and bargain hunting should follow.
Downside risk appears limited to me.
The Nasdaq has immediate resistance in the 1770-1980 area. Here are focuses of resistance within this band: 1794-1855, then 1907-1974. Immediate support is now 1752-1706 then 1698-1674.
Major S&P 500 resistance is 1136-1190, within this band there is immediate (intraday) resistance in the 1155-1169 area then a focus of resistance 1171-1184. Immediate support for the S&P 500 is 1139-1128 then 1117.50-1105.
Cherney is Market Analyst for Standard & Poor's