I cannot change the past. I have great confidence in the weekly indicator I have referred to (which recently hit oversold levels similar to Sept 2001, March 2001, October 1998, October 1990 and December 1987), but I have not seen the typical rebound in prices that I have seen in the past. I will be reviewing the prior oversold signals again to determine if there is anything different this time (I have already done this before, literally spending hours looking at different measures of volume and price but I have not been able to come up with anything truly different this time. Maybe it's just wrong this time. The bull market of 1995-2000 kept going well beyond what seemed rational, maybe this bear market is destined to do the same thing).
Intraday moves in the VIX (volatility index) below its 10-day exponential should coincide with stronger prices (like we saw on Friday).
The Nasdaq has immediate resistance 1393-1415, 1419-1430.40, then 1449 to 1491, with a focus 1480-1486. The 1480-1486 level has represented formidable resistance in the last weeks of June. The Nasdaq managed to close the price gap created by Friday's gap higher at the open. The retracement in prices represented more than 50% of the gains seen from Wednesday (July 3) to Monday's (July 8) intraday high. Pure chart readers would interpret this as increasing the odds for prints back near Wednesday's lows. The Wednesday (Jul 3) lows were Nasdaq 1336.06, S&P 934.88), but usually there is a bounce which can form before a retracement to those lows unfolds. If the bounce cannot see a daily close above Nasdaq 1415.40 or S&P 500 993.56 then additional price weakness could easily unfold.
The S&P 500 has immediate resistance 970-983.90 with a focus 980-983.90 then 987-1005.58 the focus of resistance in the 1000-1005.58 area has been especially thick. Once resistance layers are broken, they convert to support. Once supports are broken, they convert to resistance.
Nasdaq support: Immediate support is 1381-1336.
Immediate support for the S&P 500 is 957-934.
FYI, I have been concerned about the following item, and when I saw it expressed in today's Wall Street Journal I thought I should include it here. Today's WSJ, Section C, "Monday's Markets" by E.S. Browning, relative to the earnings reporting season which is starting right now: "Some investors worry that new Securities and Exchange Commission rules, requiring chief executives to personally endorse the company's financial filings and face punishment if the filings are false, could make some companies file unexpectedly conservative numbers. That could be bad for stocks, at least in the short run."
In other words, there may be companies out there that perhaps have used slightly questionable revenue/earnings enhancing techniques which might be questioned if exposed, and these companies might use this reporting period as a time to "clean the skeletons" out of the closet which has the potential to weaken earnings reports for this season, but would allow companies to have a more or less clean slate for the future. Cherney is chief market analyst for Standard & Poor's