|
|
Get Four
|  | JANUARY 20, 2005
 PAUL CHERNEY By Paul Cherney Searching for Buyers The late-session action on Thursday could be a setup for a selling capitulation on Friday I would describe the current markets as "searching for buyers" -- part of the bottoming process -- but there simply has not been enough technical evidence of aggressive buying to tilt the scales to favor of a sustained trend higher. There is a negative bias in place as long as the CBOE volatility index, or VXO, remains above 13.91, although any move lower in the VXO usually accompanies stronger equity prices. The late session action on Thursday could be a set-up for a mini selling capitulation on Friday, but I do not think that I will have major oversold signals in the overnight systems run. A major oversold signal would increase the chances for a lift of more than just a trading day. The Nasdaq is now at the top of immediate support (2,049.77-2,025.63) This support looks like a likely spot for the current decline to take a rest. I would need to see better technical evidence of earnest buying to guess that a good low had been established (no such evidence yet), but for now, the markets, on a short-term basis, appear ripe for an oversold rebound. The S&P 500 closed Thursday's session right near the lower edge of immediate support: its former trading range of 1,194.78-1,175.61. Additional support for the S&P 500 is 1,169-1,160.52. It would not be healthy for bulls to see a close under 1,160, because in my view of the chart that would increase downside risk for a test of the next layer of support under 1,160.52 which is 1,142.05-1,090.19. Immediate, well-defined support for the Nasdaq is 2,049.77-2,025.63, created right after the November elections. Next support is 1,981-1,900. S&P 500 immediate resistance is 1,185-1,195.98, then 1,205-1,209.53. There is more formidable resistance from July, 2001. The older the resistance, the less precise you can be, but here is the read from the 60-minute charts from July and August, 2001: resistance is 1,215-1,226.27. Nasdaq resistances are 2,066-2,093, with the next resistance at 2,100-2,116.75. Next resistances are 2,132-2,152, with a stacked shelf at 2,155-2,165. The Nasdaq has a small shelf of resistance at 2,059 to 2,066 and if prices can print above the 2,066 level for more than 4 minutes without attracting sellers, then a positive day for the index would be likely. Anytime resistance is exceeded it must be treated as support until broken. Anytime supports are broken they must be treated as resistance until exceeded.  Cherney is chief market analyst for Standard & Poor's All of the views expressed in this research report accurately reflect the research analyst's personal views regarding any and all of the subject securities or issuers. No part of analyst compensation was, is or will be, directly or indirectly related to the specific recommendations or views expressed in this research report. Standard & Poor's Regulatory Disclosure Any advice, analysis, or recommendations contained in articles labeled "Insight from Standard & Poor's" reflect the views of Standard & Poor's, which operates separately from and independently of BusinessWeek Online. It is possible that BWOL may from time to time publish information that is not consistent with advice, analysis, or recommendations that are published by Standard & Poor's. Standard & Poor's and BusinessWeek Online are each units of The McGraw-Hill Companies, Inc.
BW MALL
SPONSORED LINKS
Get BusinessWeek directly on your desktop with our RSS feeds.
Buy a link now! Add BusinessWeek news to your Web site with our headline feed. Click to buy an e-print or reprint of a BusinessWeek or BusinessWeek Online story or video. To subscribe online to BusinessWeek magazine, please click here. Learn more, go to the BusinessWeekOnline home page  | | |
 Copyright 2005, by The McGraw-Hill Companies Inc. All rights reserved.Terms of Use | Privacy Notice |
Printer-Friendly Version
