The VIX (market volatility index): If the VIX prints below the 36.89-35.50 level then the markets have a positive background, but if the VIX moves below 36.50 and then rebounds to start printing above it, this will probably coincide with weakness in stocks.
There have not been enough indicators hitting oversold to suggest that the technical condition of the markets can simply overlook or ignore the weight of the Iraq situation. The markets will probably need a headline which specifically advances (favorably, or interpreted favorably) the situation with Iraq in order see anything (even just short-term) meaningful to the upside.
On Wednesday, prices are probably going to have to retest the late afternoon lows meaning prints of 1285.77 for the Nasdaq and 825.09 for the S&P 500 before the potential for an intraday base and an attempt to move higher (doubtful without a headline).
At some point over the next three or four trade days a panicked sell-off might occur and that would eliminate many of the longs who are simply waiting for higher prices to exit positions. That clearing of the air (if it happens) would open the upside for another attempted short-term lift. Without that, it is a guessing game as to when the markets can muster gains of more than a day or two.
Without a headline, Wednesday might see mostly sideways trade with a slight drift lower.
These markets remain susceptible to headlines both good and bad. Sentiment can turn in an instant forcing leveraged players to cover and enticing longer-term investors to try the longside, but any violent upside move in prices will probably only be a short-term affair until something more definitive unfolds with regards to Iraq.
The Nasdaq has immediate intraday support at 1287-1275.
The Nasdaq has a well defined shelf of resistance at 1302.80-1315. Immediate resistance above 1315 is 1333-1345. The index has substantial resistance at 1358-1383.
The S&P 500 has a shelf of resistance at 832-835.72; more substantial resistance is 838-845.88. The next resistance for the S&P 500 is 857-868.62, and becomes thick at 862-868.72.
Immediate S&P 500 support is 827-817, then 806-792. Cherney is chief market analyst for Standard & Poor's