The underlying trend for higher prices remains in place, but there may only be a couple more days of gains left in the market. Without a new fundamental headline which everyone recognizes as a positive for the market, we may need to see sideways consolidation with a drift lower to help digest the gains accomplished since the Apr. 4 lows.
As mentioned in the Apr. 27 comment: Usually, when I see the kind of momentum (positive) demonstrated by the breadth and the price movement we saw in the wake of the Fed's rate cut on Apr. 18, I expect to see a high established, then a retracement and then another move higher to retest the highs in place. The S&P 500 has retested its post fourth rate cut high close (1253.70), but the Nasdaq has not (yet) tested its Apr. 19 high close of 2182.14, and I have not seen the kind of exhaustion measures I often see as the market is running out of momentum, so, for right now I have to give the market a few more days for the potential to see higher prices.
The Nasdaq had been running into a wall of resistance in the 2076-2096 area, but this area must now be considered immediate support. The next support is 2046-1995. Immediate resistance for the Nasdaq is 2135-2203 with a focus 2149-2159.
The S&P 500 has immediate resistance: 1253-1273. The next resistance is 1300-1341. Immediate support remains 1238-1223 and a test of the 1243-1233 area could easily unfold in Tuesday's market.
Paul Cherney will be taking a vacation day on May 1. Cherney on the Markets will return on May 2. Cherney is Market Analyst for Standard & Poor's