) stock decline just did not seem to matter much to the tech dominated Nasdaq on Wednesday. There were several drivers of the session's gains: a drop in oil, positive comments on the economy from Greenspan, a stronger than expected GDP in China that reignited buying in materials and cyclicals and fostered expectations for global growth. In addition to these fundamental drivers, the buying forced the VXO volatility index even lower (suggesting that part of the buying demand for stocks was an unwinding of hedges tied to options).
As I wrote in my previous comment, don't stand in the way of a moving freight train. Wednesday's price action was positive and the intermediate term measures I watch are positive. But there was big volume, too, and sometimes that can represent a short-term buyers' capitulation. I usually use 1.2 times the 50 day moving average of volume as a flag to keep myself aware of the fact that many buyers have been satisfied. For Wednesday, 1.2 times the trailing 50-day simple moving average of volume for the Nasdaq was equal to 2.0 billion shares, the preliminary volume I see was 1.978 billion. For the NYSE, 1.2 times the 50-day moving average of volume was 1.686 billion; on Wednesday, the exchange did (preliminary) 1.57 billion.
When there is a buyer's capitulation it means that short-term, a lot of demand was satisfied and sometimes there has to be some consolidation of the gains. This does not change the positive view of the markets, some people demand big volume before they become interested in buying a pullback.
Nasdaq 2170-2092 is still a natural spot for a stall in the advance, but it would take closes below Nasdaq 2144.78 or S&P 500 1221.13 to create concerns about sellers dominating trading.
I think a lack of volume might cause sideways trading after this week or next week, but right now, I do not have technical evidence of weakness.
Immediate Intraday Supports:
Nasdaq support: 2183-2175, 2167-2154.36.
S&P 500 has immediate intraday support at 1231.79-1223.03 with a focus at 1226.07-1224.70.
S&P 500: 1232-1286.62 with a focus of resistance at 1249.23-1267. A test of this focus is now possible.
Nasdaq: 2170.99-2191.60, then thick resistance at 2263.75-2328.05.