Positive Bias in Place
A huge move higher would be a surprise. Both the S&P 500 and the Nasdaq are at formidable resistance. Part of the buying interest on Friday was generated by end-of-the-quarter window dressing, and that will not be a factor on Monday. Right now there is a modest positive bias in place, but Monday can see mostly sideways trading as money managers who might have put a little money to work to support positions ahead of the end of the quarter might be interested in raising a little cash.
The improvement in momentum measures over the past two trade days has not been truly strong, but it has been an improvement and until there are signs of aggressive distribution, the benefit of the doubt is for sideways with a small move higher.
The Nasdaq and the S&P 500 broke out of 6 day trading ranges on Thursday. A standard charting technique is to add the difference between the highs and the lows of the trading range to the break-out point, that would create potential upside targets of 1239 for the S&P 500 and 2171 for the Nasdaq. But markets don't always follow chartists rules for breakout targets.
If there is an opening jump higher on Monday without a headline of obvious bullish impact, expect some minor profit-taking to pull prices back to Friday's trading range.
• The Nasdaq has resistance 2149-2162.14 resistance thickens 2155-2162.14, resistance is formidable 2177-2186.83.
• S&P 500 resistance is 1232.15-1236.49. The index has formidable resistance 1229-1242.62, the overlap represents a focus of resistance 1229-1236.49.
• Nasdaq immediate intraday support is 2146.81-2137.08. Prints below 2137.08 for more than 4 minutes would open the immediate downside risk for a test of 2132.60-2124.28.
• Nasdaq major support is 2106-2039.
• The S&P 500 has immediate intraday support 1226.98-1224.97, prints below 1224.97 for more than 4 minutes without attracting buyers to lift prices would open the immediate intraday downside risk for prints 1220-1218.
• The S&P 500 has major support 1206-1165 with a focus of support 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