Negative Bias Still In Place
By Paul Cherney
The Fed gave the markets nothing to celebrate on Thursday, and they didn't. Thursday was a unique day because many money managers charge management fees based on assets under management, marked to the market as of the close of the last day of each quarter, so there was some inspiration to try to maintain prices. That will not be the case on Friday. The historical odds do favor gains for the first day of a month, but I think the markets will need a headline to inspire aggressive buying.
The purely technical view on Wednesday was a negative bias, Thursday's session did nothing to change that. There is still a negative bias in place.
• The Nasdaq index closed below immediate intraday support of 2066-2057.48 on Thursday, and this opens downside risk first to fill a gap at 2050.98-2045.31, which might provide a small bounce once filled, but that would be a mechanical, technical rebound and it would take participation off the sidelines (fundamentally inspired participation) and right now I do not think that will happen.
• I expect a drift lower in search of aggressive buyers; a move back below 2052 would be an invitation for prices to revisit 2047-2027.
• The S&P 500 has extensive sideways supports which makes it unlikely that the index will show a dramatic decline, but if the following layers are undercut, then that means that the buyers are not interested at the current prices and prices usually have to move lower until they reach levels that are interpreted as "bargains" in the short-term.
• The S&P 500 has support 1194-1185.19, but more than 4 minutes under 1188 would not be healthy. The critical short-term price point on the chart is 1185.19. A close below this level would probably usher in a few trade days of summer doldrums sideways with a drift lower that ultimately might have to test the next layer of support which starts at 1178 and runs to 1159.96, this area of support is thick (strong) at -1173-1165.75.
Immediate Intraday Resistances:
• Nasdaq: Resistance is 2066-2076.02, stacked at 2077-2088, but just a move above 2076.02 would be an intraday positive. But it would take a close over Nasdaq 2088.99 to suggest a meaningful leg up.
I• Immediate, inside the day S&P 500 prints above 1204.07 would probably mean a push higher, but it would take a close over 1208.84 to increase the chances for a leg higher.
Cherney is president of Cherney Market Analysis