Stuck in the Fed Zone
By Paul Cherney
Wednesday's markets did not deliver anything of use in terms of technical analysis because of the caution ahead of the FOMC announcement on Thursday. If I simply disregarded the caution ahead of Thursday's headline and offered a a purely technical opinion, it would be this: there was no follow-through to yesterday's oversold bounce, and that creates a negative bias.
But we all know that if the Fed delivers hints that it is ready to employ a moratorium for rate hikes, then prices should jump higher after the announcement. Once prices move above immediate resistances, they convert to supports.
The Fed has a habit of going one step beyond what is necessary. They have telegraphed 25 basis points for Thursday and that should be a "given."
On Thursday, prices might just move sideways until closer to the announcement.
Regarding Wednesday, I was wrong about the Nasdaq being able to hit 2077; the intraday high was only 2076.02.
Immediate resistance for the Nasdaq is 2077-2088; resistance is especially thick 2083-2085.04. Any positive price action that forces prices above the 2088.99 level converts 2088-2077 to immediate support.
If there is going to be a strong move up, then buyers have to show their eagerness to be owners by being aggressive and not allowing the Nasdaq to undercut immediate support at 2068.11-2057.48. I think 4 minutes of prints under 2057.48 would increase the chances for a drift lower in search of aggressive buyers; a move back below 2052 would be an invitation for prices to revisit 2047-2027. Why am I focusing so much on the Nasdaq? Because when the Nasdaq out-paces the S&P 500 on the upside, both indexes advance.
Immediate Intraday Resistances:
• Nasdaq: 2077-2088. Resistance is thick at 2083-2085.04. Next resistance is 2095-2106.57. Resistance is stacked and runs 2106.19-2116.75.
• S&P 500 resistance is 1206.95-1208.84, then 1211-1216.43.
• Nasdaq immediate support is 2068.11-2057.48. Next meaningful support is 2047-2027.
• S&P 500 support is 1200-1195, then 1194-1188.30.
Cherney is president of Cherney Market Analysis