A Short Bias
We’d favor trading wth a short bias as long as the market stayed below 1493-1497. This morning, S&P futures were trading down 350 at 1488. We think the trade for the next week and a half will be dominated by news and Greenspan’s speaking schedule … and next week brings us Humphrey Hawkins testimony.
For the first time in months, interest rate fears are taking a backseat to earnings. We tested 1502.70 yesterday. We’ve traded btween 1451 and 1512.40 for more than a month. Until all the negative news comes out — on earnings and interest rates — we’re going to stay in this range.
This morning, on the upside, we’re looking for 1491.50, 1493, 1495-1496.50, a large cluster at 1497.50-1498-1499-1499.50-1500.50-1501.50, and then the high of 1502.70. On the downside, we’re looking at 1486.50, 1484, 1482, 1479, and a cluster of 1475.50-1472.50.
NASDAQ is trading down 28 handles at 3800. YHOO is called to open about $5 lower on fears of a poor earnings report this week. Yesterday was one of the tighter ranges we’ve seen in some time, with a 3890 high and a 3810 low. We expect more of this moving forward, as we settled just below the 20-day moving average. We are looking to play extremes off this, i.e. plus or minus five percent from this 20-day moving average would provide a trade.
In the meantime, expect more chopping around, and a stock-specific market. Good support is seen between 3670 and 3750. Along the way, we see support at yesterday’s target of 3790. Between 3790 and 3805 is the first band of support, then 3740 to 3728. If they slip below that, we see 3705 down to 3695.
Resistance is at 3859 and 3875. This is a very important area. If we were to close above this area on an hourly bass, it should mean a short-term change in the momentum back to the upside, and lead us toward the 3950 area.
The Dow settled at 10,750 in the futures, which is a 3-week high settlement. 10,805 was yesterday’s high, which came in just below the 100-day moving average, which is at 10,809. The 50-day moving is 10,742.
It would be bullish if this market were to close above the 100-day, as it would target the move toward 11,100 in the futures. If we were to settle below 10,600 in the futures, it would target a move back down toward 10,470.
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