Poised for a Retreat
By Paul Cherney
What Intel's (INTC ) higher guidance on Friday, Dec. 3, gave to the markets, the weaker than expected non-farm payrolls took away and prices moved mostly sideways.
The technical condition of the markets has not changed. End-of-day momentum measures remain at levels that usually mean retracements in price are short in duration and shallow in depth. There is a tendency for some price weakness in the beginning of December which is usually a pretty good set-up for a lift into the end of the year. No one can "know" whether we will get a retracement, but the markets have just had two trade days of good volume and very little price advance to show for it, so maybe some weakness at the beginning of next week might unfold.
The immediate line of Nasdaq support is 2,146-2,128, then 2,117-2,090.35. The index has additional support at 2,112-2,052, so the 2,112-2,090 area is a focus of buying demand.
The S&P 500 has immediate intraday support at 1,186-1,167 and overlapping support at 1,170.87-1,160.52 which makes the 1,171-1,167 area focus of buying support.
Additional S&P 500 support layers are: 1,177-1,160, then 1,147-1,127. The 1,147-1,127 area has a focus of support at 1,144-1,138.50.
Additional Nasdaq supports are 2,094-2,052 and 2,068-2,025, and that makes the 2,068-2,052 area thick with support. The next layer of support is 2,049.77-2,032.
Nasdaq resistance: There were about seven trading days in January of this year when the Nasdaq traded sideways in the 2,119-2,153.83 area. So far, the Nasdaq has spent three trading days posting prints above 2,117 without decisively breaking above and closing above the top of the focus of resistance at 2,132-2,153.83. The index exceeded the 2,153 level intraday on Thursday and on Friday, but the advance attracted sellers, not more buyers. Current Nasdaq resistance is a big band at 2,118-2,181.05 with a focus at 2,132-2,153.83. Next resistance is 2,205-2,328.
The S&P 500 has immediate resistance at 1,195-1,226.
Cherney is chief market analyst for Standard & Poor's