Positive Bias Should Continue
By Paul Cherney
I think that the markets should continue to enjoy a positive bias. There are no absolutes when it comes to the markets, but there are enough elements of price and volume momentum in place by my measures to suggest to me that a little patience for the next day or two should be rewarded with more on the upside.
Sometimes this beginning of the third quarter lift can push prices higher through to the expiration of futures and options. This month, the expiration is Friday, July 22. Right now, until the markets present contradictory evidence, volume is supporting a move higher so that's what I expect.
The lift-off from Thursday's lows has seen good gains in the Nasdaq and the S&P 500 and some consolidation of those gains would be natural and expected. And both indexes have reached price levels on the chart that look like natural short-term stall zones.
The Nasdaq has a layer of resistance at 2134-2154 and this is a natural spot for prices to digest some of the gains (they could digest for a day or two).
The S&P 500 has had prints and a close over 1219.10 and this opens the upside for at least a test of the 1224-1229 area.
The press is full of ample reasons for the long-term case for energy and intraday price weakness in oil related shares was a weight on the S&P 500 early in the session, but by the close, money must have viewed the intraday weakness as a longer-term buying opportunity. Oil services stocks and the overall energy sector managed to close with gains.
Immediate intraday support for the Nasdaq is 2124.13-2115.57 and under the current conditions I expect this level to hold if tested. Next support is 2106-2085.
The Nasdaq has resistances at 2134-2154 and 2150-2165, then 2170.99-2192. This makes the 2150-2154 area a focus of resistance.
The S&P 500 has immediate intraday support at 1214.69-1207.69, with thick support at 1212.19-1207.79. Next support is 1206-1199.
The S&P 500 has immediate resistance at 1224-1229.11. A close above 1229.11 would be a short-term bullish move. Next resistance is from all the way back in the spring of 2001 at 1232-1286.62 with a focus of resistance 1255-1267.
Cherney is president of Cherney Market Analysis