By Paul Cherney Mixed signals. The historical studies keep odds high that there could be strength into Friday's close, but the intraday action reflects a state of distribution. So far, critical (short-term) support levels have held, which (on a chart basis) keeps the chances of another attempt to move higher in place.
On Thursday, reports on third quarter GDP and employment cost index (ECI) and October Chicago PMI will hit the markets, so that increases the chances for a cautious market on Wednesday ahead of the reports.
Intraday measures are in configurations which usually precede a positive tone for prices. Some residual selling in the morning might depress prices in the first hour of trading, but as long as there is no headline of indisputably bearish importance, a labored move up off the lows of the session should see prices close the day with a gain.
Support: The critical S&P 500 support for the consolidation established over the last 8 trade days is 865.56-856.28. If prices cannot hold this level, then a test of the 844.39 to 826.85 level is likely.
The S&P 500 has multiple stairsteps of support: 890-873, 877.51-866.14, 866.64-856.28, 850-840. A move below 866 is still not expected.
Immediate Nasdaq support is 1287-1267 with a focus 1279-1267. The Nasdaq's next support is 1253-1229.06.
Resistance: Immediate intraday resistance for the S&P 500 is 891-904 and 900.50-909.89 which makes the 900.50-904 area a focus of resistance. Next resistance is 909-928.
The Nasdaq has thick resistance 1299-1347. The Nasdaq has a layer of resistance inside this band of resistance at 1332-1347. The next higher resistance is 1360-1427 with a brick wall at 1374-1399. Cherney is chief market analyst for Standard & Poor's