Resistance Up Ahead
For S&P futures, we see major resistance from 1503 to 1512.50. In overnight trade, volume was extremely light. This morning, S&Ps were down 50 cents at 1488.50. Today should be an important day. Any further downside probing, will generate some short-term sell signals.
On the upside, we need to trade over a resistance band between 1496 and 1498. If we can hold that, look for a test between 1503 and 1505. Above that, last week’s high at 1507 and Thursday’s high of 1506 come into play.We also have the key resistance between 1510 and 1512.50. All in all, we have major resistance from 1503 to 1512.50.
On the downside, 1483 is a key level. Below 1483, look for a test of support between 1479.50 and 1477.50. Under that, we should slip quickly to 1470 and then we have good support between 1466 and 1464. Any settlement below 1483 is short-term bearish. 1469.40 is the 50-day moving average; 1498 is our high settlement for the last three weeks. Any settlement above 1500 is very bullish. The 3-day to the 10-day moving averages all rest between 1489 and 1494.50.
NASDAQ was trading down about 17 at 3810. Very calm session on Friday. The near-term moving averages are found between 3800 and 3818. As long as we continue to settle above these, it should lead to further upside. However, 3900 is beginning to look as though it will be the make or break area for this market. If we settle above 3900, go with it. In the meantime, we may just “back and fill” before embarking on our new direction.
For today’s trade, we see support between 3800 and 3785. Trading below this should be a sell area, and look for a test of 3732 down to 3718. Any trading below this should find support between 3694 and 3680. As for resistance, we see 3833, then 3855 to 3865. This has been our key area for three sessions in a row. Above this, we have 3880, which was Friday’s high, and then the key 3900 level. We still have all the resistance between 3900 and 3958, with the key being 3917.50.
In addition, Oracle reports earnings will be released tomorrow. This will be a familiar theme for the next few weeks as we are about to head into earnings season. As for the Dow, overall weakness in the financial sector led us to a 265-point drop on Friday, and also violated a 61.8% retracement of the recent up move by closing below 10,492. An 88% retracement will come in at 10,331 in the cash. In the short-term, it certainly appears as though 10,250 to 10,200 is key support.
One note: even with Friday’s hammering the Dow only lost 165 points on the week. We expect a little more stability in the financial sector this week. But all in all, if we close below 10,200, we will be sellers, and if we were to close above 10,850 we’ll be buyers.