It will take a close in the VIX (market volatility index) below its 10-day exponential moving average before I can start to expect a reversal in prices. The 10-day exponential moving average of the VIX finished Tuesday's session near 42.74. It is ultimately going to take a VIX close below this level to indicate that at least the short-term tide in prices has the potential to reverse (from lower prices to higher prices).
The caveat remains: with such a high 10-day moving average, it is not a healthy sign to see the VIX cross under its 10-day moving average and then move back above this measure for more than two consecutive days. Waiting for the VIX to cross underneath its moving average means you miss the first day or two of a potential price reversal, but when markets are moving lower, not being in a market when the VIX is this high and trending higher is a psychological advantage.
If there is a spike above 50.00 in the VIX, and prices close back down below the 50.00 level I would interpret that as a short-term bullish sign.
Support: Immediate support for the S&P 500 is 818-796.73 (this is inside the 844-775 price range created on July 24).
Immediate support for the Nasdaq is 1170-1100.
Resistance: Immediate intraday resistance for the S&P 500 is 825-834, then 839-849.
Immediate resistances for the Nasdaq are 1216-1243 and 1232-1251, which makes the 1232-1243 area a focus of resistance. Cherney is chief market analyst for Standard & Poor's