Oversold? Not Quite
By Paul Cherney
NYSE breadth measures issued oversold signals, but Tuesday was a day that should have seen a solid advance in prices so I have to consider the signal a failure.
These signals usually mean a few days of choppy trading with potential for some minor gains and some minor gains can still unfold, weaker oil prices would help to buoy the market and some end-of-the-quarter window dressing might help limit downside, but the bigger problem for the current markets is that other measures I run are currently building evidence to suggest that even if there is a small lift in prices, there should be a loss of upside momentum and lower prices (prices that will probably undercut the recent lows) should unfold.
• The Nasdaq has intraday resistance at 2124.28-2132.60, Meaningful resistance is 2155-2162.14, resistance is thick at 2158-2163, and is formidable at 2177-2186.83.
• S&P 500 intraday resistance is 1218.99-1225.61, then 1232.15-1236.49. The index has formidable resistance at 1229-1242.62.
• Nasdaq immediate intraday support is 2114-2099.
• Nasdaq major support is 2106-2039, and it is a critical support, that, if broken would open the downside for sub 2000 prints. I expect this level (2106-2039) to hold. Inside the 2106-2039 support layer, there is a focus of support 2106-2072 and this is still a likely spot for the markets to make a stand (if tested again). Inside this zone is a focus of measures in the 2087-2072 area and prints inside this area should compel short covering which can easily lead to a more protracted rise.
• The S&P 500 has well-defined support at 1206-1165, with a focus of support at 1206-1183. This is a very strong layer of support and is expected to hold if tested again.
Cherney is president of Cherney Market Analysis