By Paul Cherney
I have some mixed intermediate-term signals based upon Wednesday's 60 minute bar "oversold ready to bounce" signal. Both the NASDAQ and the S&P 500 had issued the same system signals on Wednesday. In Thursday's price and volume action, the NASDAQ did not register levels I associate with a "continuation" signal which usually means an additional 1 to 3 days (starting tomorrow) of gains. The NASDAQ did not offer a failure signal either; this system of measures was just neutral through the NASDAQ trading day, not offering any signal.
The real problem with conflicting signals is the S&P 500. I had an overnight systems signal which predicted that the index had to close over 1137.46 on Thursday to keep the odds favoring higher prices. That did not happen, so this system has now issued a warning that odds have increased that the S&P 500 should have some choppy, sideways to negative price action (sometimes only two trade days of closes which are lower than the open). Here's the real conflict: The intraday measures which can signal continuation (in the aftermath of the "oversold ready to bounce" signal which occurred on Wednesday) came through with flying colors and signaled that odds favor 1 to 3 more days of gains for the S&P 500 starting tomorrow.
In light of the lack of consensus in these signals I will go with the short-term trend in place and guess higher prices for both indexes in Friday's session, but if prices start to move below NASDAQ 1,915 or S&P 500 1,116 then short-term supports will be faltering and a slide in prices is likely.
The NASDAQ has immediate intraday support 1925-1915. The index has considerable resistance 1942-1985.83 with the first focus of resistance 1942-1966 and that is still the likely spot for a leg higher to run into problems. There is a very thick layer of resistance 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 has immediate support 1123-1116. The index finished Thursday's session in a test of resistance 1126-1139.50. The next layer of resistance is 1152-1177 with a focus 1156-1164.
The index has well defined intermediate term support in the 1111-1052 area. There is a focus of support inside this region at 1094-1080.
Cherney is market analyst for Standard & Poor's