More Upside Likely
By Paul Cherney
The intraday price action on Tuesday -- a drop in prices which finds buyers and sees a rebound -- is usually a positive pattern for the next day.
Immediate overhead resistance for the indexes might limit gains, but positive closes are expected.
These markets are a coiled spring waiting for an excuse to vault higher. The potential for a short-squeeze is high for Wednesday's session.
The S&P 500 finished Tuesday's session inside a layer of resistance from 838-844.60. If the S&P 500 can move above the 844.60 level it will convert 838-844.60 to support. The next resistance is 853-869, and inside of this layer is an especially thick layer from 857-862. If there are prints above the 852.87 level, there is the potential for a more exaggerated short-squeeze which could see an intraday surge to prints near 870, but then intraday momentum players might bow out for a close in the 862-857 area.
Immediate intraday support for the S&P 500 is 826-815, with a focus at 826-818. Next S&P 500 support is 806-768.
The Nasdaq has immediate intraday resistance at 1327-1332; more substantial resistance is 1335-1343. If the index prints above 1343, a short-squeeze could propel prices to the 1355-1379 area.
In Tuesday's session, the Nasdaq established intraday support at 1303-1294. The index has closed its gap.
The Nasdaq has additional support at 1303-1279, with a focus at 1296-1287.
Cherney is chief market analyst for Standard & Poor's