Data Will Be Key
By Paul Cherney
The historical studies keep odds high that there could be strength into Friday's close, and now, measures based on price and volume have improved to neutral with a positive bias. Quite often, as we approach a big report like the employment report on Friday, end-of-day indicators reflect a neutral reading which might be the result of bets and hedged bets ahead of the numbers.
Critical short-term support levels have held, which keeps the chances of another attempt to move higher in place.
On Thursday, third-quarter GDP and employment cost index, and October Chicago PMI, reports will hit the markets. Expectations (based on Fed funds futures) are that the Fed will cut rates at Wednesday's (Nov.6) meeting, so in the convoluted logic of the Street, bad numbers for the reports might actually bolster speculation for a rate cut and higher equity prices might follow.
Support: The critical S&P 500 support for the consolidation established over the last eight trade days is 865.56-856.28. If prices cannot hold this level, then a test of the 844.39to 826.85 level is likely.
The S&P 500 has multiple stairsteps of support: 890-873, 877.51-866.14, 866.64-856.28, and 850-840. A move below 866 is still not expected.
Immediate intraday S&P 500 support is 886.28-879.19, with a focus at 884.59-882.27
Immediate Nasdaq support is a thin shelf at 1318.93-1300.55, with a focus at 1315-1311. Next support is 1287-1267, with a focus at 1279-1267. The Nasdaq's next support is 1253-1229.06.
Resistance: Immediate intraday resistance for the S&P 500 is 891-904 and 900.50-909.89, which makes the 900.50-904 area a focus of resistance. Next resistance is 909-928.
The Nasdaq has thick resistance at 1299-1347. The Nasdaq has a layer of resistance inside this band of resistance at 1332-1347. The next higher resistance is 1360-1427, with a brick wall at 1374-1399.
Cherney is chief market analyst for Standard & Poor's