Markets & Finance

Downside Odds Increasing


By Paul Cherney I was wrong about a one-day bounce. The lower closes on Wednesday increase the chances for additional downside or sideways price action.

Thursday will probably see cautious sideways trading ahead of Friday's December employment report. The jobs report will probably influence prices for the following 2 to 5 trade days.

Immediate

supports have been broken on a closing basis and they are now

resistances.

Immediate intraday support for the S&P 500 is 1,184-1,180.40. The next layer of support is a broad band of prices that overlaps at 1,186-1,167 which is why short-term downside is probably limited, because there is so much price traffic in this area.

The Nasdaq has immediate support at 2,085-2,052.80, then 2,044-20,25.

S&P 500 resistance is 1,185-1,195 then 1,205-1,209.53. There is more formidable resistance from July, 2001. The older the resistance, the less precise you can be, but here is the read from the 60-minute charts from July and August of 2001: resistance is 1,215-1,226.27.

Nasdaq resistance is 2,097-2,118, then 2,132-2,152, with a stacked shelf at 2,155-2,165. This is within the broader resistance based on 60-minute charts from 2001 (old resistances are not as precise as recent chart action) is 2,153-2,181.05, the index has spent some time above the 2,181 level on an intraday print basis, but has not been able to close above this level. In Monday's session the Nasdaq printed a high of 2,191.60 before the sellers became more aggressive than the buyers. This has set a small shelf of resistance at 2,177-2,191.

Anytime resistance is exceeded it must be treated as support until broken. Anytime supports are broken they must be treated as resistance until exceeded.

On a more intermediate-term basis, the technical case for equities has weakened and longer-term measures of momentum of price and volume have fallen to neutral readings. Usually, under circumstances like this, there is still an underlying willingness to buy which takes a few weeks to be extinguished, but the current readings represent a wildcard in terms of price retracements. Measures of price and volume are no longer at levels that allow me to express an opinion that I think retracements should be shallow in depth and short in duration. Cherney is chief market analyst for Standard & Poor's


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