Weak Opening
S&Ps are looking very weak this morning after the release of CPI, which came in basically in line with estimates.
S&Ps are trading at 1218.70, down 4.30 pts and below cash, which means we are trading about 9.00 pts under fair value. Negatives news from companies such as
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PowerRating) and Nortel
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As for the trade today, S&Ps have a neutral zone between 1224 and 1227.50. Above this, look for 1234. Along the way, 1229 to 1231 is light resistance. Between 1235 and 1237.50 is strong resistance.
On the support side, we have support between 1219.50 and 1216.50. If this is broken, we’re looking for a move to 1200. Along the way, 1212.50 to 1210.50 is support, and 1205 to 1202.50 is our next support range.
NASDAQ is in process of filling the gap that we have discussed since it occurred — the double-whammy Intel earnings gap/Fed cut gap. 1670 fills it in the cash NASDAQ. Currently the NASDAQ futures are 1695, off 1600 points. That would mean that if we opened here in the cash, we would be trading around 1680 in the cash. We have support between 1682 and 1675.
Expect resistance between 1695 and 1710. Above this, will be unchanged at 1711. We would also look for a move toward 1735. We have resistance between 1730 and 1745.
The Dow broke and settled below our key support level of 10,750. This market is beginning to look much weaker than anticipated. The market now needs to establish a base, and quickly.