In Wednesday's session we saw virtually the opposite. In the morning there was a little carryover of that Monday selling, but it couldn't generate signficant followthrough. By Wednesday afternoon, there was persistent buying in the heavy-weight techs and this has set a positive price tone for the positive seasonal bias already in place. I think there should be net gains over the next two trade days.
I have heard it said that Thursday has the potential to be a non-descript day because there could be hesitation to commit on the longside ahead of Friday's employment report. That is possible, but the rationale for this is questionable because unemployment figures are a lagging indicator.
We are about to enter the earnings reporting season and ahead of those reports I think the downside is limited.
The Nasdaq has been testing intermediate term (a weekly view) brick wall resistance in the 1934-2106 area.
Immediate intraday resistance is 1984-2002.72. Because the index has moved mostly sideways for the past 15 trade days, there are multiple layers of resistance. I think it would take a move above the 2027 area to force a short-swift run-up. The Nasdaq has a focus of reistance in the 2010-2027 area, after that the next level of resistance looks like 2061-2106.
The Nasdaq has well defined intermediate term chart support 1965-1853. The index has intraday chart support 1942-1913.
The S&P 500 has intermediate term brickwall resistance 1153-1206.
The S&P 500 has a thin shelf of intraday support 1147-1132.
These comments remain valid: Downside risk appears limited, but upside moves in either index (Nasdaq or S&P 500) would be suspect unless a clearly bullish headline accompanies the move. The indexes are stuck in a sideways trend waiting for a catalyst, maybe the earnings reports in January will represent that catalyst. Cherney is market analyst for Standard & Poor's