Downside risk appears limited.
There was so much "good" positive momentum generated by the recent breakouts above the trading ranges that there should be a residual positive effect that should prevent prices from making a dramatic drop, and the ranges established in June, July and August themselves represent substantial technical support, but another trade day of sideways hesitation would be natural based on the short-term oversold signals generated in Wednesday's overnight systems run and the psychological weight of the earnings confessional season.
The S&P 500 has a focus of immediate
support at 1,015-1,008. The Nasdaq's immediate support is 1,825-1,799.
resistance is multi-layered, which is why a substantial jump higher does not appear likely right now.
Immediate Nasdaq resistance (intraday) is 1,853-1,859.21.
The S&P 500 is inside the 1,015.87-1,021.51 layer of resistance, the next well-defined layer is directly overhead at 1,023-1,026.76.
The Nasdaq has immediate resistance at 1,853-1,859.21 then 1,874-1,893; this layer of resistance is based on intraday trading (60-minute bars) from March 18 and 19 of 2002. The further back in time you go, the less important short-term intraday price ranges become. But this market has not moved above the 1,893 level intraday.
The Nasdaq has a price gap created by the opening on March 12, 2002. These are hourly charts and the gap runs from 1,899.01-1,928.12. Quite often, the first test of a price gap brings sellers to the markets.
S&P 500 resistance (daily bar charts) was established by price action in June of 2002, it is 1,008-1,041 with a focus at 1,020-1,031. The index has been unable to close above the 1,031 level. The next resistance is big at 1,048-1,107, from March, 2002. Two different measures of the potential upside for the current break above the 1,015 level target 1,047 and 1,070 as potential upside prints.
Immediate support for the S&P 500 is 1,015-988 with a focus at 1,015-1,008.
On a pure chart basis, the Nasdaq's breakout of its trading range has created the potential for a test of 1,912-1,954. The S&P 500 has the potential to print 1,047-1,070. There is no time schedule for these potential moves. Cherney is chief market analyst for Standard & Poor's