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Cherney: Positive Tone Still in Place, Nov05

by Cherney, chief market analyst for Standard & Poor's
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But there could be concerns about immediate downside if the Nasdaq started printing under 1,945

Near the close of trading on Wednesday, the VXO's (market volatility index) 10-day exponential moving average was near 17.77. Equity markets tend to rise when the VXO is beneath its 10-day exponential moving average and moving lower.


There is still a positive tone in place for prices. It is not very strong, but it still has to be characterized as positive. I would become concerned about immediate downside if the VXO moved above its 10-day exponential or if the Nasdaq started printing under 1,945, for the S&P 500 a similar price of downside concern would be a move under 1,044.

Ultimately, (within the next two weeks, maybe as soon as this week), I think that prices are going to move to an S&P 500 close at 1,068 or higher and Nasdaq close at 1,988 or higher, but these prices represent the first test of thick resistance levels and they should prompt short-term and position traders to book profits which should stop the advance and possibly lead to some volatility.

Immediate Intraday Supports: Nasdaq intraday support is 1,962-1,945. Supports are stairstep and the next layers are 1,949-1,941 and 1,939-1,924.07. The overlap of 1,949-1,945 represents a focus of short-term support.

S&P 500 closing supports are a small shelf at 1,055.12-1,048.75, then stacked at 1,046-1,043.

Resistance Levels: Nasdaq immediate resistances are 1979-2011.25 and 2042-2073.

The S&P 500 has immediate resistance at 1,068-1,106, with thick, "brick-wall" style resistance at 1,068-1,090.