We are starting to move into the reporting season and it will take a more positive view of future earnings to help these markets move higher.
Volume was healthy at both the NYSE and the Nasdaq and I think the markets are in a bottoming process.
If we are really going to see a reversal in prices, I think we are going to have see money move out of bonds to fuel a lift in stocks. Ticker TNX is the 10-year Treasury note yield (just move the decimal point one place to the left). While the markets have trudged lower, bond prices have moved higher, pushing the yield on the 10-year note lower (to 44-year lows). A reversal of this process is probably going to have to take place to signal a return to equities. The TNX chart looks as if it has the potential to reverse, but I think it would take a move in the TNX above immediate resistance 36.90-37.56 to signal such an event.
October has a reputation for being a bear killer (meaning some big bear markets have ended in October), prices can push lower in the beginning of the month (we've seen that) and then prices can rebound in the second half of the month (this might be happening).
There is a real possibility that prices don't really trend up or down for a few trade days while the markets wait for encouragement in the form of positive corporate earnings and outlooks.
Support: The S&P 500 has immediate support 793-779. There is a pocket of support 785-775. The next layer of support (from daily charts dating from April, 1997) is 771-733; there is a concentration of price action in the 763-747 area.
The Nasdaq is inside a band of support 1154-1118. The next layer of support under 1118 is 1082-1017.
Resistance: Immediate intraday resistance for the S&P 500 is 801-811.62 Resistance is stacked and very thick at 817-830.
Immediate resistances for the Nasdaq are 1125-1146, then 1164-1184.56 (focus). Cherney is chief market analyst for Standard & Poor's