Headlines concerning earnings reports can still set the markets back for a day or two but as long as the trading range lows (Nasdaq 2,066.79, S&P 500 1,175.61) are not undercut, the benefit of the doubt has to start shifting in favor of the bulls short-term. Concerns about additional downside must move to the back burner if prices move higher again on Wednesday.
This is options expiration week and sometimes Wednesdays can move in one direction at the morning and then slowly reverse field by the afternoon.
Even though the S&P 500 has managed a close above its trading range high, the Nasdaq's 7 day trading range is still intact, bounded by 2,116.75 on the upside and 2,066.79 on the downside.
The S&P 500's trading range has been converted to immediate
support: 1,194.78-1,175.61. Additional support for the S&P 500 is 1,169-1,160.52. Next support under 1,160.52 is 1,142.05-1,090.19.
Immediate support for the Nasdaq is 2,096-2,076 with a focus of support 2,092-2,080. Support runs all the way to 2,052.80. There is a well-defined support at 2,049.77-2,025.63, created right after the November elections. Next support is 1,981-1,900.
resistance is 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, 2001: resistance is 1,215-1,226.27.
Nasdaq resistance runs from 2,100-2,116.75. Next resistances are 2,132-2,152, stacked shelf at 2,155-2,165.
Anytime resistance is exceeded it must be treated as support until broken. Anytime supports are broken they must be treated as resistance until exceeded. Cherney is chief market analyst for Standard & Poor's