Positive Momentum in Place

But upside might be just a short-term modest gain unless there are bigger improvements in trading volume

By Paul Cherney

Volume was too light in the session on Thursday, Apr. 7, to be a confidence builder for a strong trend higher, but there is positive momentum in place for prices.

The Nasdaq composite index managed to close above the 2,017.66 level and in my view of the chart, that increases the chances for additional upside.

The S&P 500 index is right at the top edge of its recently established trading range and a close over 1,193.28 would be a positive.

Expecting prices to make a move higher, but at this time I think the upside might be just a short-term modest gain unless there are bigger improvements in the volume measures.

Now, the Nasdaq 2,017.66-1,968.58 area is immediate support.

Technically, the S&P 500 remains inside the trading range so these comments remain valid: Immediate support for the S&P 500 is 1,189-1,182 then 1,179-1,163.69. The S&P 500 has a concentration of support 1,169-1,163. Under 1,163, the next layer of support is 1,147-1,120, inside 1,147-1,120 there is a focus of support 1,142-1,131. It would take a close above the 1,193.28 level to increase the chances for additional upside.

The Nasdaq has resistance at 2,017-2,027 so prices might stagger in this area for a day or two. But in the short-term, I do not think it would be healthy to see a retracement that generates Nasdaq prints under 1,992.60. The close above 2,017.66 should be a short term positive. Next resistances are 2,036-2,059 and 2,047-2,069.42, which makes the 2,047-2,059 area a focus of resistance. Additional resistances are directly over the 2,069 level at 2,078-2,093.68 and 2,101-2,111.43.

The S&P 500 has immediate resistance at 1,178.82-1,189.80, there is a particularly well-defined layer of resistance at 1,183.78-1,188.40 (generated ahead of the FOMC announcement on Tuesday, Mar. 22). Next resistances are 1,190-1,193.28, then 1,199-1,210; resistance gets thick at 1,204-1,210.54. There is broad resistance at 1,206-1,229.11, which has a focus of resistance at 1,213-1,219. Above 1,229, the next layer of resistance is 1,240-1,286, with a focus at 1,246-1,261.

The VXO moved lower Thursday, but prices did not react by moving higher so I am focusing my attention on the trading range prices

Cherney is chief market analyst for Standard & Poor's

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