In the Pivotal Zone
S&Ps this morning were trading unchanged at 1461, right in the lower end of our morning pivotal area of 1464-1461. Meanwhile this morning, the Dow was called to open lower on the earnings warnings by Eastman Kodak
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PowerRating), as well as sympathy selling in Hewlett-Packard
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PowerRating) also sent out warnings, thereby affecting the printing area of Hewlett.
For S&Ps on the upside, we see 1464.50, 1467.50, 1470, a key area at 1471, a major at 1471.50, 1473.50 and a critical area at 1477.50, which was yesterday’s high.
On the downside, we’re looking at 1459.50, a key area at 1454.50, 1452.50, a major area at 1451, and then 1447.50.
We think the 1451-1456 area will be important today. That’s where the market turned around on Friday in the last hour of trading. Also last Friday, we said the market would have to be sustained above 1463.50. If it can’t hold this area today, we think it will test 1455, and if it can’t hold, then 1451. Any settlement below 1448.70 is very negative.
The NASDAQ was trading unchanged at 3675. Yesterday’s session was disappointing for the bulls. The market was able to hold the 3650-3675 support zone. This will be critical today. As long as we do not close on an hourly basis below this level, the upside still has a chance. If we fail, look for a trade below 3600, which was last week’s low.
Along the way, 3632-3625 will be critical support. Under 3600, we see 3580-3575 and then 3555-3545 will be important. Any settlement below 3600 will be bearish.
On the upside, 3690-3710 will be the first key area. Expect this to trade since much of yesterday afternoon’s volume was seen in this zone. If we get above that, it targets a run to 3750.
We have resistance between 3741 and 3756. Above that, 3775 to 3780, and if we get above that, it should allow the market to make a run to yesterday’s 3830 high. Along the way, 3805, which was our open, will be important.
The impact earnings-warnings news will be negative for the Dow. But the market should hold 10,700 to 10,650 in the cash. If it were to close below this, however, that would be a large negative and target a run towards 10,400. We are still looking for a move to 11,000 first.