More Gains Likely

Tuesday should see gains unless two key economic reports come in decidedly weaker than expected

By Paul Cherney

This is still the case: There should be sufficient support under current levels to stop a decline, but there has not been convincing evidence that buyers are ready to take control of the markets.

Money managers have a vested interest in supporting prices on Tuesday because many money managers' quarterly performance is based on assets under management, marked to the market, as of the close of the quarter. It's easier to spend some money to support prices than it is to try to lock in profits by selling a mountain of stock and then having to re-establish long positions again in the following quarter.

Tuesday should see gains unless the September Chicago PMI and the September consumer confidence reports (both scheduled for release at 10:00 a.m. ET) come in decidedly weaker than expected.

Immediate intraday resistance for the S&P 500 is a shelf at 1,008-1,015.97, with a focus at 1,011-1,014.71. Resistance is stacked, with the next layer at 1,014-1,026, with a focus at 1,018-1,023. Once resistance levels are exceeded, even just thin shelves, they must be considered support until they break.

Immediate intraday resistance for the Nasdaq is 1,827-1,856.12. Resistance becomes thick starting with prints of 1,835 and higher; there is a focus of resistance at 1,845-1,856.12. The next big layer of resistance is 1,867-1,913.

Immediate support for the Nasdaq is 1,822-1,807.

Immediate support (daily charts) for the S&P 500 is 1,008-983. Support in this area can be further refined into two levels -- 998-988 and 991-983 -- so there is a focus of support at 991-988. Some sort of a "W" bottom might have to form which means that even though it looks like additional gains on Tuesday would be natural, the lift might run out of momentum and retrace to establish a "W" on the daily charts.

All of the sideways trading range price action experienced in June, July, and August represents huge support for prices.

Cherney is chief market analyst for Standard & Poor's

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