Weakness Possible on Monday

The S&P 500 was unable to push above a key resistance level in Friday's session

By Paul Cherney

All in all, Friday, June 4, was not a very inspiring day (short-term) for the bullish camp. I would not be surprised to see some weakness on Monday.

The CBOE volatility index, or VXO, is probably going to have move below 15.95 to suggest additional buying interest for stocks.

Immediate resistance for the Nasdaq is 1,989-2,009.11.

Immediate intraday support for the Nasdaq is 1,981-1,967, additional support is 1,971-1,957.58. A close below 1,957 would open downside risk for prints 1,934 and lower. Support under 1,957 is 1,934-1,913.73, then 1,918.08-1,899.85, with a shelf of support 1,918-1,914.

Immediate intraday resistance for the S&P 500 remains 1,123-1,129.25. In Friday's session, the index printed a high of 1,129.17, unable to push through the 1,129.25 level. The S&P 500's next layer of resistance above 1,129.25 is 1,135-1,149.

Immediate intraday support for the S&P 500 is 1,116.71-1,109.91, with a focus inside this zone at 1,116-1,112.71. The index has a small shelf at 1,109.04-1,106.10, then substantial support 1,100.72-1,090.74.

The potential breakout price targets for the May 25 breakouts are 1,136 for the S&P 500 and 2,011 for the Nasdaq. The breakout price levels were S&P 500, 1,105, Nasdaq, 1,938. Sometimes breakout levels are retested.

Here are some statistics about Junes during presidential election years. All percent changes based on price of S&P 500; the date range was 1928 to 2003.

Since 1928, there have been 19 presidential election years and for the month of June; the S&P 500 has been higher 15 out of 19 times, or 79% of the time.

The average of all 19 years (the 15 winning Junes and the 4 losing Junes) was a gain of 1.87%; for the current market, that would equate to an S&P 500 close on June 30, 2004, of 1,141.64.

Based on S&P 500 price data since 1928 for the 19 presidential election year Junes, the average of all the best closes (see note below) for each of the 19 Junes was a gain of 4.22%, which for the current market, would equate to a close of 1,167.97.

The average of the worst closes inside the June months of presidential election years was a loss of 1.37%. The equivalent for the current market would mean a close of 1,105.33, right at the bullish breakout level of Tuesday, May 25, 2004.

These are just averages, and every market is different, but these averages of the best and the worst do offer a window of expectations: If average performances were replicated, the closing price ranges inside the month might be 1,105-1,167.97.

Historically, the odds have been about 8 in 10 (15 out of 19 times) that the presidential election year Junes have closed with gains for the month.

BEST CLOSES: "Best closes" are calculated by taking the highest daily close in the month and expressing that close as a percentage change from the close at the end of previous month. This was done for each of the 19 presidential election year Junes and then all of those best closes were averaged. The same was done with the worst closes.

Cherney is chief market analyst for Standard & Poor's

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