A Reason for Holiday Cheer?

The odds are building for the re-establishment of a more consistently positive price trend

By Paul Cherney

All the sideways travel in the markets that occurred from the last week of October until this past week represents a sturdy base of support. Those levels are 1425-1317 for the Nasdaq and 926-867 for the S&P 500. I do not expect these levels to break.

The closer we get to Tuesday, Dec. 10, the more the odds build for the re-establishment of a more consistently positive price trend.

Historically, based on the past 42 years of S&P 500 data, the odds are roughly 7 in 10 (74% of the time) that the December low will occur on or before (for this year), Dec. 10 (Tuesday).

A possible indication that the December low has been established (and that a more consistent trend higher will unfold) would be a drop in the VIX (market volatility index) and a close under its 10-day exponential moving average, which finished on Friday near 31.40.

Support: The S&P 500 has multiple stairsteps of support within the broad 926-867 area: 915-907 and 910-904 (which makes the 910-907 area a focus of support). The next layer of support is 897-887.

Immediate Nasdaq support is 1426-1407, then 1395-1371.

Resistance: The S&P 500 has resistance at 932-965. Immediate intraday resistance is 915-926.27, then 932-944.

The Nasdaq has resistance at 1445-1461.45, then 1474-1506 and 1492-1568, which makes the 1492-1506 area a focus of resistance. Immediate intraday resistance for the Nasdaq is 1427-1435.

Cherney is chief market analyst for Standard & Poor's

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