Bears' Growl Grows Louder

While the markets are still technically in trading ranges, measures of short-term momentum are pointing to lower prices

By Paul Cherney

Please note: Paul Cherney will be on vacation Friday, Jan. 14. His column will return Tuesday, Jan. 18.

The sellers are becoming aggressive, but the markets are still technically in trading ranges. I am referring to the last seven trading days (Thursday included). Prices will move out of the range at some time -- maybe Friday.

The Nasdaq's seven-day trading range has been bounded by 2,116.75 on the upside and 2,066.79 on the downside.

The S&P 500 trading range has been bounded by a high of 1,194.78 and a low of 1,175.61.

There is short-term momentum in place for lower prices.

Immediate intraday support for the S&P 500 is 1,169-1,160.52. The next support under 1,160.52 is 1,142.05-1,090.19.

Immediate support for the Nasdaq runs to 2,052.80, but the only layer of well-defined support is 2,049.77-2,025.63, created right after the November elections. The next support level is 1,981-1,900. I think a break below the recent swing low of 2,066 would increase the chances for a print in the 2,049-2,025 support area. But selling might be limited to a day (the day of the break lower) and a another half day if there is a a large volume selloff near the opening of trading.

S&P 500 resistance is 1,185-1,195, then 1,205-1,209.53. There is more formidable resistance from July, 2001. The older the resistance, the less precise you can be, but the reading from the 60-minute charts from July and August of 2001 puts resistance at 1,215-1,226.27.

Nasdaq resistance starts at 2,076-2,096, overlapped at 2,082-2,116.75, which makes 2,082-2,096 a focus of resistance. I no longer ascribe any short-term importance to the 2,111.43 level. Next resistances are 2,132-2,152, with a stacked shelf at 2,155-2,165.

Anytime resistance is exceeded it must be treated as support until broken. Anytime supports are broken they must be treated as resistance until exceeded.

Cherney is chief market analyst for Standard & Poor's