By Paul Cherney From Cherney Market Analysis
I have doubts about the ability of the markets to advance in a truly strong fashion, but for now, until even minor supports are broken on a closing basis, the benefit of the doubt remains in favor of slightly positive price action.
I would become concerned about closing losses on huge volume, or short-term closes under NASDAQ 2078.34, S&P 500 1206.95. If this were to happen, then short-term concerns about the loss of the uptrend should generate additional price weakness. But that has not happened yet.
This is still the case: The measures of buying and selling pressure I keep (up volume vs. down volume) are no where near the levels of strength exhibited in the fourth-quarter rally of 2004, but the readings have registered thresholds that make me expect that the first dip in prices will be viewed as a buying opportunity (ultimately) by the markets.
Late in Monday's session, 60-minute measures of price momentum hit levels that usually mean as few as 1 to as many as 4 trading hours of sideways price action.
I think the markets might have to re-group at slightly lower levels, but there currently is no definitive technical evidence that this has to happen, so immediate intraday chart supports and resistances represent only minor potential break-points for prices (up or down).
Immediate Intraday Support are:
S&P 500 1216.80-1213.06
Immediate Intraday Resistances are:
NASDAQ 2092.77-2098.53. Today's intraday high for the NASDAQ was 2096.77.
S&P 500 1216.95-1219.50. Today's intraday high was 1219.10.
NASDAQ resistance is 2083-2103.45. Next layer above 2103.45 is 2106.19-2116.75.
S&P 500 resistance is 1205-1219.50. Next layer 1221-1229.11.
When resistances are exceeded they are considered supports until they prove otherwise.
NASDAQ supports are: minor shelf 2088.18-2085.26, stacked at 2084-2078.34, stacked at 2076-2063. overlapped at 2066-2052.96 which makes the 2066-2063 a focus of support.
Usually, with this many layers of minor support, it's difficult for the index to just slice lower. But if the NASDAQ moves down and prints under the 2052.96 level for more than 4 minutes without attracting buyers, then downside risk increases for a drop to test 2043-2027. The index has thick support starting at 2043 and running to 2027. If prices move lower and test support at 2043-2027, the first test of this area should attract buyers for a rebound. Whether that rebound attracts enough follow-through to push prices above recent highs can only be assessed when the levels of participation in the rebound are measured.
The S&P 500 has numerous layers of support and it is usually difficult for markets to just slice through layers of support like this.
Immediate intraday support for the S&P 500 is a minor shelf at 1211-1206.95, overlapped at 1208-1200.12 which makes the 1208-1206.95 area a focus of support. Additional support: 1199.11-1191.03, there is a layer of support that overlaps at 1194-1185.19 which makes the 1194-1191.03 area another focus of intraday support.
There would be great concern for additional price weakness if the index closed under 1185.19.
I think the markets are at critical levels and if there is going to be more upside, now is the time for the NASDAQ to reclaim a leadership role. The markets have spent plenty of time moving sideways over the past 3 weeks and now is the time to move higher or falter. I would not want to see closes below S&P 1191 or NASDAQ 2052 because in my view of the current markets, that would increase the chances that a rebound would be weak.