It is still my expectation that the immediate levels of support will hold. I just have not seen enough signs that the sellers have tossed in the towel, or that the buyers are becoming aggressive. There is usually a basing process that has to play-out and right now I do not think that process has completed yet.
This is a difficult market to call. Why? Because I have already had signals I rely on pretty heavily that suggest that there has to be a basing process, and that would mean another couple of days. But I also recognize the potential for headline relief from a Rita that does little or no damage. I have to go with the technicals.
I have doubts that any Rita Relief lift will generate a significant trend higher for equity prices. Yes, there can be a few days of a lift, but there will probably have to be something else, like a "we're ready to do what is necessary to insure economic growth" statement from the Federal Reserve, to produce a real lift.
On a purely technical basis, more basing is what would be expected, but obviously, headline reactions to Rita are the wild-card that allow for some upside.
I think I would be wrong about a short-term basing process if the S&P 500 managed a close above 1231.27, Nasdaq 2162.14.
The Nasdaq has intraday resistance 2118.13-2139.17, then important resistance 2155-2162.14, resistance is thick 2158-2163, resistance is formidable 2177-2186.83.
S&P 500 intraday resistance is 1218.99-1225.61 then 1232.15-1236.49. The index has formidable resistance at 1229-1242.62.
Nasdaq major support is 2106-2039, and it is a critical support, that, if broken would open the downside for sub 2000 prints. I expect this level (2106-2039) to hold. Inside the 2106-2039 support layer, there is a focus of support 2106-2072 and this is still a likely spot for the markets to make a stand. Inside this zone is a focus of measures 2087-2072 and prints inside this area should compel short covering.
The S&P 500 has well-defined support 1206-1165 with a focus of support 1206-1183. This is a very strong layer of support and is expected to hold.