Weaker than expected nonfarm payrolls might be greeted by the markets as a short-term inspiration to buy.
These technical observations remain valid: No two markets are ever exactly the same, but after reviewing similar technical conditions in the past 8 years, I expect the current lift to run out of momentum and then retest and slightly undercut the lows established on Tuesday. But, I would start to doubt those concerns if the employment report ignited buying that pushed the S&P 500 up for a close over 1,193, or the Nasdaq above 2,027. No real reaction to the employment report might see the markets just moving sideways, in that event, I would no longer expect a retracement that undercuts if either of the indexes has two closes above their respective 20 period exponential
moving average. The 20 period exponential moving average for the S&P 500 is 1,186.32, for the Nasdaq it is 2,017.90.
The Nasdaq has immediate
support at 1,995-1,982.10. There is a focus of support in the 1,971-1,954 area and even with a failed rebound, I would expect this area to support a retracement. The 1,971-1,954 focus of support is inside the broader immediate support of 1,981-1,900.
Immediate support for the S&P 500 is 1,179-1,160.52. The S&P 500 has a concentration of support at 1,169-1,163. If the index were to have a close under 1,160.52, in my opinion, that would open downside risk for a test of the next layer of support -- 1,147-1,120 -- with a focus of support 1142-1131.
The Nasdaq has
resistance at 1,986-2,008.63, stacked and well-defined at 2,006-2,017.66, making a focus of resistance 2,006-2,008.63 a focus of resistance. A close above 2,008.63 should force a wave of buying at the open on the following trading day. Nasdaq prints 2,016 through 2,027 are thick with resistance and the first move into this area (if there is a move into this area) is likely to be repelled unless it is accompanied by a headline that virtually everyone recognizes as bullish. Next resistances are 2,036-2,059 and 2,047-2,069.42, which makes the 2,047-2,059 area a focus of resistance. Additional resistances are directly over the 2,069 level at 2,078-2,093.68 and 2,101-2,111.43.
The S&P 500 has immediate resistance at 1,178.82-1,189.50, there is a particularly well-defined layer of resistance 1,183.78-1,188.40 (generated ahead of the FOMC announcement on Tuesday, Mar. 22). Next resistances are 1,190-1,194.84, then 1,199-1,210; resistance gets thick at 1,204-1,210.54. There is broad resistance at 1,206-1,229.11, which has a focus of resistance at 1,213-1,219. Above 1,229, the next layer of resistance is 1,240-1,286, with a focus at 1,246-1,261. Cherney is chief market analyst for Standard & Poor's