Positive Bias for Prices
By Paul Cherney
On balance, there is a positive bias for prices.
Late in the session on Monday, Mar. 1, 60-minute measures for the Nasdaq registered levels which can see some follow-through on the following morning, but then a little profit-taking in the afternoon.
The momentum measures are not particularly strong for either index, but they are positive and unless something changes, assume positive price action will continue. Positive price action does not mean that every day is a gainer; as long as supports are not broken, assume bulls are in charge.
Immediate Nasdaq support is 2,045-2,032, then 2,024-2,012, overlapping at 2,014-2,005, and the bigger band established over the months of October, November, and December, 2003, of 2,007-1,959. There is a focus of support at 2,001-1,996. Next support is 1,980-1,959.
Immediate support for the S&P 500 is 1,150-1,141.80, overlapped at 1,147-1,138.62, which makes the 1,147-1,141.80 area a focus of support. Next support is 1,129-1,124.
Nasdaq immediate chart resistance is 2,049-2,062.48, then 2,072-2,094.92. This resistance actually goes all the way to 2,102. There is a focus of resistance at 2,072-2,091. Next resistance above 2,102 is 2,108-2,153.83.
The next layer of chart resistance for the S&P 500 is 1,149-1,176.97, with a layer of resistance inside this zone at 1,149-1,158.98.
The CBOE volatility index, or VXO, is below its 10-day exponential moving average, which I interpret as a background positive for prices. Here's a reminder: the VXO measures implied volatility, and the lower the number, the smaller the expectations for price moves. Low volatility means lackluster, anemic price moves.
Very near the end of trading on Monday, the 10-day exponential moving average of the VXO was 15.53.
Cherney is chief market analyst for Standard & Poor's