Ready, Aim …
With S&Ps trading at 1486.50, about 10 points above fair value this morning, we have some vital targets on the up and down side. On the upside, we see 1487.50, 1490.50, and a key area at 1491-1491.50. We’ll have to stay above 1491 for this market to go higher. Then we see 1493, 1495 and 1496.50, which is a major objective.
On the downside, we see 1483, 1481.50, 1480, 1477.10, a key area at 1473.50, and a major objective at 1472. The morning pivotal area will be between 1482 to 1483. Yesterday, between 1476.40 and 1477.50 there was huge buying, with 100-lots every 20-30 seconds.
NASDAQ futures were up 40 at 3860. The market is being helped this morning by strong earnings from TXN. Obviously, this is not a NASDAQ issue, however it is a leading semi-conductor issue. As for the market, the key area will be 3815 to 3790 on the support side. As long as this support holds we are looking for a trading rally to take us back over the 3930 area.
If this area does not hold, any settlement below 3775 adds to the bearish scenario, and should lead to an eventual test of the 3652 low for the month. On the way up to 3930, here are some resistance areas: 3870, 3877, and 3894-3902. Above 3902, 3910-3915 becomes the key. Above 3915, it should be a straight shot to 3930.
Any settlement on an hourly basis above 3930 bodes well for the remainder of the week, and targets 4050 as the next upside.
Dow futures were called to open about 50 points higher at 10,830. AT&T (T) reported better than expected earnings. In addition, MRK’s earnings yesterday helped the Dow significantly. If the market can get above the 10,840-10,850 resistance area and settle above this zone, it should lead to a run toward 11,000. On the downside, if we take out support outlined yesterday around 10,725, we would look for further selling down toward the 10,580 area.
One key note is that we are essentially within 100 points — or 1% — of the 3-day to the 100-day moving averages. What this means is the market is consolidating, as it has been since roughly May. This is signally that we will have a substantial move from here.
This move may not occur in the short-term, and could take a few weeks to play out. But traders should keep in mind that once the market goes, it should be a strong move in whichever direction.
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