A Positive Reversal
By Paul Cherney
I had conflicting technical indicators for the Nasdaq during Wednesday's session -- bullish and bearish readings simultaneously. I am going to disregard the technical measures I use and I will focus on the charts and volume. I think the that the markets should move higher on Thursday, but I just don't know whether we can see a protracted move.
There was an intraday price reversal for all three of the major equity indexes in Wednesday's session, and none of them (DJIA, S&P 500, Nasdaq) undercut the lows they had set either Monday or Tuesday. That is a short-term positive. The price action on the chart looks like it could represent a double bottom in the very short-term. I like the fact that we moved lower and then reversed. I wish the Put-Call ratios had expanded. I wish the total trading volume for the NYSE had been higher than Tuesday's session, but I can't tell the markets what to do. The overall price action looked positive for Thursday's market.
The Nasdaq has immediate intraday resistance at 1685-1696.03. There is another layer of resistance at 1696-1718. This makes the 1696 level a pivotal price point. If the Nasdaq can manage to print above the 1696 level in Thursday's session there could be a positive bias set in place by a little more short-covering and some short-term traders riding the intraday momentum.
The S&P 500 finished Wednesday's session inside its immediate resistance of 1082-1096.77. If it can print above the 1096.77 level then that would convert the 1082-1096.77 area to immediate support.
The Nasdaq's immediate intraday support is 1682-1666. The index has a broader band of support at 1673-1626.99, with a focus at 1660-1649.
The Nasdaq's resistance is really a broad layer from 1674-1728.52 but there is a particularly thick layer of price action the 1697-1718 area. The next layer of resistance is 1736-1763
Immediate S&P 500 resistance is 1082-1096.77, with a focus at 1088-1093.18. The index has thick resistance at 1103-1133.31, which should rebuff a first assault.
Cherney is chief market analyst for Standard & Poor's