Taking a Breather
By Paul Cherney
I still expect the DJIA to ultimately come within 2% of its close before the WTC tragedy. I expect to see the DJIA close at 9400 or higher within the next 17 trade days (if it follows similar patterns I have identified from 1933 and 1930). The other major indexes should follow along or even gain more, but since the study was based on DJIA price action in the wake of a weekly loss of 10%, it is the price of the DJIA that I will use as my potential signal.
The S&P 500 is in a natural spot (on the price chart) for a stall in the advance. A "stall" does not necessarily mean a decline, it could be just sideways action. The Nasdaq also should just consolidate on Friday. Intraday on Thursday, the Nasdaq moved into the price gap created by the resumption of trading on Sept. 17 (the gap now runs 1641.56-1669.94) and this area is a natural spot for a stall as people who were caught long the market on Sept 10 have prices come back to "breakeven" levels where some will opt to sell.
All of these comments are made on a technical basis only, obviously (I think) if there is any sort of military action or a positive development in the war on terrorism, the markets should have at least a one day surge.
Here are the immediate resistance numbers for the S&P 500:
Immediate resistance should be found 1073-1096.94 with a focus of resistance 1085-1096.
Immediate support for prices during this upleg (started 9/21/) is now 1046-1026.
Immediate Nasdaq support is now 1568-1545, then more substantial support 1528-1458 with a focus 1503-1472. The index has immediate intraday resistance 1618-1642. There remains a strong focus of resistance in the 1584-1605 area which is capping closes.
Cherney is market analyst for Standard & Poor's