Dell Tolls
S&Ps were trading down 200 points at 1448.20 after Dell
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PowerRating) pre-announced negative news last night. On the upside, the first area is yesterday’s settlement around 1450. Above that, we have 1453.50, 1457.50, a major at 1461.50, and 1463.50. We’ve been talking about this area around 1463.50 for two weeks. If we don’t get above this area and stay above it, that could be trouble. Above that, we have 1465.
On the downside, we see 1444, which is a key level, then 1442, a major at 1439, and another major at 1437. Remember that 1438 was a double bottom until yesterday, and then yesterday’s low was 1433. Below that, we see 1431 and a critical area at 1426.50. With Non-Farm Payroll being released tomorrow, look for short-covering.
The NASDAQ was called to open 25 lower at 3452. In addition to Dell, Siebel Systems
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PowerRating) is called to open $5 lower. That’s one of the top 15 components of the NASDAQ 100. Yesterday’s low in the cash was 3291, breaking the summertime low substantially.
While we did rebound to settle higher yesterday, the continuing fact in this market is that we cannot rally from higher levels. We have had nice reversal days, such as yesterday, during this whole decline. But nobody is stepping out to aggressively buy these stocks or the index after a good upmove.
The enthusiasm needs to be reasserted at higher levels. Otherwise, this pattern will continue. In addition, you cannot discount the fact that money is coming out of the Tech Sector and into the Old Economy sector, hence, the reason for the Dow rally but the stabilizing trade in the S&Ps.
For today, support is seen at 3450 and 3435, then 3405 to 3390. If we get below 3390 look for a move to yesterday’s low of 3330. Along the way 3362 to 3355 will be support. If we were to break 3330, it looks like the next logical target would be 3240.
Resistance is at 3475 to 3488, then 3510 to 3525, if we get above 3525 look for a move to 3587. If we can close above this level it is bullish and targets a move to 3800.
For the Dow, the flight to quality and money flow have been key components to the up move. If the NASDAQ rallies, look for the Dow to falter. If the NASDAQ falters, look for the Dow to rally. We’re still looking for 11,000.