Upside is Limited
By Paul Cherney
Wednesday's advance was a short-term oversold rebound, and some follow through on Thursday is possible.
An important low for the NASDAQ has now been tested and retested and each time, buyers came to the market and prevented prices from undercutting the previous lows. You have to interpret this as a short-term positive although the upside is probably limited due to the reluctance to make two-fisted bets in the face of the remainder of the earnings reporting season.
The NASDAQ has defined the 1944-1934 area as important support. After reviewing NASDAQ prices from April 11th through the 17th of this year (when the NASDAQ was powering out of the April 4th low), I think the shelf of support established in the 1944-1891 level is considerable and should support price. so even if the NASDAQ moves below the 1934 level, additional downside should be limited.
The NASDAQ has immediate resistance 1971-2047 with a focus 1994-2016. Additional resistance is 2069-2105 with a focus 2069-2083.
The S&P 500 now has immediate support 1184-1174. Next support is 1170-1139 with a focus 1157-1144. Resistance is 1196-2025 with a focus 1207-1216. (There is a brick wall of resistance in the 1227-1242 area.)
Cherney is Market Analyst for Standard & Poor's