Longer-term momentum measures remain positive,
Downside appears limited because momentum measures have registered levels which usually mean residual positive momentum is in place. When this is the case, the first pullback in price, even a decline of two or three trading days, is usually viewed by the markets as a buying opportunity.
Near the close of trading on Tuesday, the 10-day exponential moving average of the VXO (market volatility index) close was 16.49. If the VXO moves back above 16.49, that would probably be coincident with weaker stock prices
support for the S&P 500 is 1,118.48-1,113.69, then 1,106-1,100; the broad support is 1,106-1,068 and 1,083-1,053, which makes a focus of support 1,083-1,068. Price support thickens with prints of 1,096 and lower. If prices were to spend more than four minutes below 1,113 without attracting buyers, then downside risk would open for prints of 1,109 and lower.
resistance for the S&P 500 is 1,116-1,133, then 1,151-1,176.
Immediate support for the Nasdaq is 2,037-2,027, then 2,022-2,010. Considerable support exists at 2,001-1,986, then 1,974-1,960.
Immediate resistance for the Nasdaq is 2,026-2,105. Resistance thickens with prints of 2,038 to 2,060, and prints above 2,058 will probably start to attract some profit-takers unless there is a headline of undeniably bullish importance.
There is virtually no competition for an investment dollar. Downside appears limited, but after the earnings reports for the fourth quarter, the upside might be limited, too, as the markets digest some of the gains of the past 15 months. Cherney is chief market analyst for Standard & Poor's