Upside Appears Limited

There is a short-term positive bias in place for the S&P 500

By Paul Cherney

Upside now appears limited in the short-term -- "limited", not "eliminated." The buyers hold a slight advantage, but their strength is starting to weaken. For now, though, there is nothing especially strong to suggest a dramatic plunge in prices.

The Nasdaq is a problem for the markets as it is unlikely that the selling on Friday, Sept. 3, represented enough of the potential sellers to clear out the overhead supply. The Nasdaq probably needs to have some sort of a selling capitulation, but I would not become concerned about the risk of immediate downside unless or until the Nasdaq closes below 1,830.30.

For the Nasdaq there is a balance between buyers and sellers right now. I would become concerned about some price weakness and some follow-through lower in the Nasdaq only if there was a close below 1,830.30.

Immediate intraday resistance for the Nasdaq is 1,852-1,867 then 1,870-1,876. Resistance runs all the way to 1,896.31

Nasdaq support is 1,843-1819, but a close under 1,830.30 would probably initiate a period of price weakness.

There is a short-term positive bias in place for the S&P 500. During the lift from the Aug. 12 lows, there were enough positive readings to suggest that prices can still labor higher or at least linger near current levels for a few more trade days. For the S&P 500, the balance between buyers and sellers is in favor of buyers, although the advantage is not huge.

Immediate resistance for the S&P 500 is 1,123-1,130.33 with a focus at 1,124.60-1,127.02. This year's June price action established more formidable resistance in the 1,129-1,146.34 area, with a focus of resistance 1,132-1,140.

Immediate daily support for the S&P 500 is 1,110-1,094.

Cherney is chief market analyst for Standard & Poor's

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