More Consistency In Store

Odds still favor higher prices, but not rocketshots to the upside

By Paul Cherney

Both the NASDAQ and the S&P 500 have sturdy bases of support. Those levels are NASDAQ 1425-1317, and S&P 500 926-867. I do not expect these levels to break.

As of Tuesday, Dec. 10, the historical odds strengthen for the re-establishment of a more consistently positive price trend. Over the past 42 years of the S&P 500, the odds are roughly seven in 10 (74% of the time) that the December low will occur on or before (for this year) Dec. 10 (Tuesday). SEVEN IN 10 ODDS MEANS THAT THERE ARE THREE IN 10 ODDS OF LOWER PRICES. I do not expect any rocketshots to the upside, just a little more consistency. Retracements should be shallow.

On Tuesday, the VIX closed below its 10-day exponential moving average, which was near 32.05 late in the session. As long as the VIX stays below its 10-day exponential, this keeps the technical odds in favor of a little more consistency to the upside. Tuesday's intraday price reactions to the Fed's much-anticipated move was not typical of the intraday price reactions of the past year, so therefore, I have doubts that tomorrow's S&P 500 will reverse. Other studies I have performed based on the VIX carry high odds that the S&P 500 will close Thursday's session (Dec. 12) above 909.58.


  The S&P 500 has multiple stairsteps of support within the broad 926-867 area, immediate intraday support is 897-887 and 891-872.

For the NASDAQ, immediate support is 1388-1367 with a focus of support 1387-1378. Next definitive support is 1347-1317.


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

The NASDAQ is at the top edge of its immediate resitance which is 1371-1395, next resistance is 1407-1426.

Cherney is chief market analyst for Standard & Poor's

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