Waning Momentum

Based on Wednesday and Thursday's price action, stocks could be hit by some weakness

By Paul Cherney

The S&P 500 has risk for sub 1100 prints in Friday's session. The Nasdaq has downside risk for prints 1800-1785.

The S&P 500 has immediate support 1110-1100. The index has resistance 1114-1135.52. Resistance becomes thick with prints of 1123 and higher. (Thursday's intraday high was 1135.75, so technically, I would have to say upside resistance runs to the 1135.75 level now.)

Major resistance (brick wall, based on end of day data) for the S&P 500 is 1153-1199.

The Nasdaq has a shelf of resistance 1847-1869. Thursday's price action has extended that layer of resistance to the intraday high of 1888.39. Immediate support is 1820-1781 with a focus 1807-1793. The next support is 1759-1726.

Based on weekly charts, the positive momentum in prices has not faltered yet. On a daily basis, the markets are overbought. In truly strong advances, markets can stay overbought, but the intraday price action of both Wednesday and Thursday (when prices advance intraday but are unable to hold onto the lion's share of gains) are usually followed by some price weakness.

Cherney is market analyst for Standard & Poor's

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