More Gains Likely

Based on a signal from a key indicator, there should be follow-through buying in Thursday's market

By Paul Cherney

On Jan. 22, I had an indicator issue a signal that is usually followed by a day and half of gains. This same indicator issued the same signal this morning so I expect followthrough buying in Thursday's market with gains on the day. This indicator can offer an additional signal in Thursday or Friday's session that would increase the odds for another one to three trade days of gains, but that will depend on price and volume.

The Nasdaq has immediate intraday resistance at 1913-1925. The index has considerable resistance at 1942-1985.83 with the first focus of resistance at 1942-1966 -- and that is still the likely spot for a leg higher to run into problems. Actually, prints above 1930 are probably going to be used as exit points by position traders.

There is a very thick layer of resistance at 1966-1986 and then stacked right on top of the 1986 there is resistance 1977-2018 which makes the 1977-1986 level a focus of resistance.

The S&P 500 index finished Wednesday's session testing its immediate intraday resistance which is at 1110-1118. The index' next layer of resistance is at 1126-1139.50.

The index has well defined intermediate term support in the 1111-1052 area. There is a focus of support inside this region which prevented prices from falling on Tuesday, that level is at 1094-1080. Tuesday's swing low was 1081.66.

Cherney is market analyst for Standard & Poor's

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