All the sideways travel in the markets that occurred from the last week of October until this past week represents a sturdy base of support; those levels are 1425-1317 for the Nasdaq and 926-867 for the S&P 500.
Historical performance figures for the S&P 500 and the Nasdaq on the Wednesday before Thanksgiving and the Friday after Thanksgiving carry high odds for small gains on each of these days. The best odds are for gains in the Nasdaq on Friday; in the the last two years (2001, 2000), the Nasdaq has seen good gains on the Friday after Thanksgiving, rising 1.5% in 2001 and 5.41% in 2000. Overall, the Nasdaq has had gaining sessions 28 out of 31 times, or 90% of the time.
Here is an excerpt from my most recent study for S&P MarketScope: I looked at the past 42 years of price performance for the S&P 500 from the Tuesday of the week of Thanksgiving until the close of the first trading day of the new year. Some 74% of the time, the lowest close between Thanksgiving and the new year occurred on or before the ninth trading day (the ninth trade day after the Tuesday of Thanksgiving week). The ninth trade day for the current year would be Dec. 10. This is very close to Dec. 8, the date by which U.N. chief arms inspector Hans Blix has said Iraq must produce convincing evidence that it has no banned weapons. Some observers think that the U.S. has to give Iraq at least until Dec. 8 before an engagement. Uncertainty ahead of that date might prevent the markets from gaining ground.
Another study I have done on price performance in a quarter following a third-quarter loss of 10% or more saw (on average) the best close for the quarter occur in that same week. These studies are contradicting each other. I think the Iraq situation will weigh on sentiment and it is this one factor which I think will prevent the markets from making significant gains, so I am more inclined to expect mid-December lows in or before the week of Dec. 9-13. I do not expect the extensive support established in the last week of October through the week ending Nov. 15 to break.
Support: The S&P 500 has multiple stairsteps of support within the broad 926-867 area: 915-907, 910-904, and 897-887.
Immediate Nasdaq support is 1425-1407.
Resistance: The S&P 500 has resistance at 932-965.
The Nasdaq has resistance at 1449-1486. Well-defined resistance (strong) is 1492-1555. Cherney is chief market analyst for Standard & Poor's