The most important aspect of Wednesday's market might be that the downside appears limited as the markets wait for the headline which really forces the short-covering crush.
For intraday action on Thursday: Expect a flat market with a positive bias if the VIX (market volatility index) can stay below 39.11. A move below the 38.40 level would be sign that bulls are taking command, a move below 37.36 would mean that aggressive short-covering was taking place.
Any headline interpreted as relief of the uncertainties on the Iraq front and the terrorist front will serve to prompt bears into buying to cover open short positions.
When resistance levels are exceeded, they convert to support.
Immediate intraday resistance for the S&P 500 is 804-810.59, then 815-826.
Immediate intraday resistance for the Nasdaq is 1277-1310, with a focus of 1279-1285.
Immediate resistance levels which do not appear likely to give way unless there is a headline perceived as bullish by the markets are: 835-852.87 for the S&P 500 and 1331-1353 for the Nasdaq.
The S&P 500 has support at 806-768. On Wednesday, the intraday action established support at 795-788.
The Nasdaq has support at 1273-1253, then 1222-1188. Cherney is chief market analyst for Standard & Poor's