Positive Bias in Place
By Paul Cherney
There is a positive bias in place. Thursday's price action spoke volumes to the notion that the Nasdaq market "wants" to put a positive spin on whatever guidance and comments Intel offers in its post-close conference call.
I don't have technical evidence that the positive price action is over. So, my assumption is that the trend in place remains the dominant theme until proven otherwise, or, until cautionary flags appear in the indicators. One potential signal that the upside momentum could be over would a drop in the VIX to under 20. Moving under 20 is only the set-up. If this measure of volatility were to dip below the 20 level and then move back above it, that would be a potential warning signal. Another potential warning signal would be the Equity Only Put/Call ratio at the CBOE. If this ratio of put volume to call volume registers a .32 or lower at the end of a day, usuallly, the market is ripe for some sort of profit-taking.
Volume has not been the greatest.
The Nasdaq has now entered an area on the chart that appears to be a natural spot for profit-taking, the 2263-2282 area, so I will be watching for signals that the odds could be shifting to favor lower prices (in the short-term). The next layer of resistance for the Nasdaq (above 2282) is 2339-2593 with the first focus at 2339-2406.
The Nasdaq has a band of support 2258 through 2194. If 2194 were to be broken, the next layer of support is 2167-2150. Any print below 2194 opens downside risk for prints in the 2167-2150 area.
The S&P 500 is testing immediate resistance in the 1253-1295 area. Tuesday's intraday price action has established a small but importaant shelf of resistance (intraday) in the 1284-1286.62. Immediate support is 1283-1270. Then 1265-1254.
Cherney is Market Analyst for Standard & Poor's