A Lack of Conviction
By Paul Cherney
We are approaching the end of the earnings reporting season, that could be a positive (less negative news to digest until the next warning season). But in the short-run, the equity indexes are starting see momentum fade.
Low volume in Monday's session attests to the fact that there is little conviction in this market. Economic reports on Tuesday might stir participation, but for now, upside and downside appear limited. If the Nasdaq were to gain more than 12 points in Tuesday's session it would move one of more reliable indicators into an overbought zone which usually heralds a brief retracement (one to three trade days) and then another short-term move higher.
The Nasdaq has a thin shelf of intraday support in the 2019-2009 area. Monday's session reinforced the importance of the 2009.94 level as immediate intraday support (very short-term), Monday's intraday low print was 2009.94 and so was Friday's. If prices break below 2009, the next layer of support is 1995-1963.
The Nasdaq has immediate resistance 2021-2047. Additional resistance is 2069-2105 with a focus 2069-2083. The next resistance is a brick wall at 2137-2181.05.
The S&P 500 has immediate support 1199-1195 then 1184-1174. The index has resistance 1207-1216. (There is a brick wall of resistance in the 1227-1242 area.)
Cherney is Market Analyst for Standard & Poor's