Sideways Price Action Likely
By Paul Cherney
The chances of a higher close on Monday, Apr. 28 (higher than Wednesday's close) appears slim at best. The weaker than expected first-quarter GDP figure was the focus for the markets on Friday despite stronger than expected Michigan Sentiment and strong new home sales.
As the VIX (market volatility index) remains above the 23.40 level I don't think the indexes can close above Wednesday's levels. The overall technical conditions have weakened to neutral with a slightly negative bias. There are substantial supports directly below current levels and Friday saw increases in the Put/Call ratios which might expand to oversold readings with even just a small decline in prices next week.
There is little in the way of technical evidence to suggest that prices should press higher. Sideways price action seems likely until new technical conditions emerge.
Supports: Substantial supports are 1426-1392 for the Nasdaq and 911-877 for the S&P 500, with especially thick support starting with prints of 896 to 887.
Resistances: S&P 500 resistance is 918-935, with a focus of 924-931. The next resistance is 951-965.
The Nasdaq has two focuses of resistance created by the price action near the January, 2003, top and the November, 2002, top. They are 1433-1467 and 1445-1474.69. These resistances overlap at 1445-1467. Next resistance is 1495-1521.
Cherney is chief market analyst for Standard & Poor's