Consolidation
Yesterday was a consolidation session, and it would not surprise us to see more of the same today. With CPI tomorrow, we’re a little friendly to the upside, because we think some of the shorts may end up squaring their positions today and we could see a little spike up today — especially if we can hold the 1372.50-1375 area.
S&P futures were trading unchanged this morning at 1391.50. Essentially, the same comment as yesterday: none of our levels were penetrated during yesterday’s session, and we think the first key level in terms of resistance will be between 1396 and 1398.50.
If we can get above this, it should pave the way for a trade to the zone between 1407.50 and 1410. Along the way, 1403 should be light resistance. If we can get above 1407.50-1410, we have a chance to get up toward 1420, with 1415-1416 as resistance.
On the downside, the first level of support will be between 1388 and 1386.50. Below this, 1383 is a number under which the market should accelerate to the downside, leading us to a support zone between 1376.50 and 1374.50. If we take this zone out, there is a good chance we could trade down to the 1366 to 1363 area.
The NASDAQ is currently trading unchanged at 3316. Impressive and very interesting day yesterday. Impressive because Intel
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PowerRating) were all substantially lower and yet the market was able to shrug it off and settle higher on the strength of the second-tier issues.
For today, we have resistance between 3335 and 3350, and then 3380-3385. If the market gets above 3385, we’re looking for a move to 3450, and this will take out last week’s highs at 3400. Above 3450, the next target is 3570. As for today’s trade we think 3450 would cap the upside.
On the downside, we see support between 3300 and 3290, then 3255 to 3245, which is a critical area. If we trade through this zone, look for a move to 3180. Along the way, 3220-3215 is support. Under 3180, the market should move to 3130, with support between 3145 and 3155.
The Dow held up very well in light of Intel/Microsoft, gaining 46 points. Still, it has not retraced all of Thursday’s loss. For the upside, that is the first target — 10,450, which is 200 points away. Worth noting: the longer it takes to retrace this move, the more bearish it is.
After the close, Intel reports earnings as does IBM. IBM reports at 3:08 Central, at which time S&P futures are still trading. So traders beware!