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Cherney: Stocks Likely to Struggle Higher


Indicators have now assumed positions which tilt the odds in favor of higher prices

by Cherney, chief market analyst for Standard & Poor's

Note: Paul Cherney will be out of the office beginning Nov. 20. His column will return Thursday, Dec. 4.

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This is option expiration week.

The VXO (market volatility index) is going to have to get back below its 10-day exponential moving average to lend legitimacy to this lift in prices, but for now there are enough indicators at or near oversold levels that a struggle higher seems likely. Nothing ever lines up exactly, but indicators based on end-of-day data have now assumed positions which tilt the odds in favor of higher prices.

One more day of indecision (Thursday) is possible, but after reviewing similar indicator patterns over the past nine months, I would expect the current configurations to indicate higher prices in the short-term (expecting four out of the next seven or eight trading days to have closing gains).

Support: Nasdaq support runs 1,892 through 1,873.62; the index has a price gap in the charts at 1,873.62-1,866.43.

S&P 500 support is 1,039.93-1,034.00 and 1,037.75-1,029.19.

Resistance: Immediate resistance for the Nasdaq is 1,906-1,926.00, then 1,930-1,937.92, then 1,945.69-1,956.93.

The S&P 500's resistance is stacked: 1,041.75-1,048.77 and 1,048.11-1,052.10. Additional resistance is 1,054 to 1,062.19, with a focus at 1,056.94-1,060.79.