Upside Likely for Stocks

Historic odds are high that the S&P 500 can finish near the 940 area

By Paul Cherney

Friday's failure to see a huge stock market decline in reaction to the disappointing December drop in nonfarm payrolls has to be interpreted as an underlying positive.

Next week is option expiration week and trading can become jagged, but historic odds are high that the S&P 500 can move closer to and finish near the 940 area. The markets are always susceptible to headlines, which I can't predict.

Intraday indicators are not offering any definitive indications for Monday's markets.

Daily bar charts: There is a positive price bias in place which is being supported by volume measures. This keeps intermediate term odds (over the next week) in favor of net gains. Under the current technical conditions, retracements naturally occur, but unless there are technical breakdowns during these retracements, a positive bias remains in place.

Support: Immediate support for the Nasdaq starts at 1424, the well-defined support is 1411-1375, with a particularly strong layer 1408-1392.

Immediate support for the S&P 500 is 922-914, then well-defined support is 911.25-898.

Resistance: Based on intraday charts, resistance for the S&P 500 is 935-954.28, with a focus 935-942.

Resistance for the Nasdaq really starts to get thick 1449-1462. Next layer 1473-1500.

Cherney is market analyst for Standard & Poor's