For Stocks, a Lack of Conviction

If Friday's jobs report was unable to inspire buying, what is there to drive prices higher?

By Paul Cherney

The haunting question is: What's left to propel prices higher? The earnings season is almost completely over, the Fed is on hold. The October Employment report delivered stellar numbers, but the markets couldn't attract a stampede of buyers. If this report was unable to inspire buying, what is there to drive prices higher?

The Nasdaq printed above 1,988, but attracted sellers.

I do not have overwhelming technical evidence to suggest that prices have to move dramatically lower next week. Prices might just move sideways, but if the markets could not move higher on the robust numbers in the employment report then that tells me that the buyers are meek, they lack conviction and this raises the possibility that sellers might have the upper hand for a couple of trade days.

Immediate Intraday Supports: Nasdaq intraday support is 1,971-1,966.

S&P 500 intraday chart support is 1,055-1,051.99.

The Nasdaq has additional support at 1,962-1,945, and stairstep support at 1,949-1,941 and 1,939-1,924.07. The overlap of 1,949-1,945 represents a focus of short-term support and it would not be healthy if prices moved under 1,945 but the first move under this level (if one occurs) might force a shakeout and then a rebound the following trade day.

S&P 500 closing supports are a small shelf at 1,055-1,048.75, then stacked at 1,046-1,043.

Resistance Levels: Nasdaq immediate resistances are 1,979-2,011.25 and 2,042-2,073.

The price action on Friday was so out of character (after such a strong Employment report) that it compelled me to re-examine my resistance prices for the S&P 500. I reviewed price charts from the beginning of May, 2002. I am adjusting my perception of immediate chart resistance to 1,058.67-1,106.59. I had been calling for resistance at 1,068-1,106. For the S&P 500, 1,068-1,090 still represents a "brick wall" that should turn back prices on the first test.

Cherney is chief market analyst for Standard & Poor's