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By Paul Cherney From Cherney Market Analysis

The measures created in the runup from Thursday's lows (Thursday, July 7, 2005) force me to maintain a short-term positive bias. In the short-run (the next 2 or 3 days), I do no think that prices can make a dramatic fall as the markets hold out to see more earnings and hear what Greenspan has to say to Congress on Wednesday and Thursday. But, due to the summer volumes, I have real doubts about the market's ability to forge much higher than the recent highs. I think there would have to be a headline of indisputably bullish importance to create another big leg higher. If it comes, we'll all know.

Potential headline sources include IBM (IBM) earnings/guidance after Monday's close (the street expects quarterly EPS of $1.03) and Tuesday after the close, Intel (INTC

; the street expects 32 cents). The North American Semiconductor Book-to-bill Ratio is scheduled to be reported 3:00 pm Pacific Time on Tuesday; that used to be a big headline back in the 1990s.

Greenspan testifies to Congress on Wednesday and Thursday. I do not think that he will hint at any end to the measured pace tightening cycle, but I also think that the markets now accept that reality and will/can react positively to comments of economic strength from Greenspan.

I think I would be wrong about a short-term positive bias if the following immediate support levels were undercut on a closing basis: Nasdaq, 2128-2115.57; S&P 500, 1222-1212.11.

Technical levels have not changed.

Immediate intraday resistance established Thursday, July 14 (still valid):

S&P 500: 1223.1229.12-1233.16.

Nasdaq: 2156-2164.18

Immediate intraday supports are:

Nasdaq support: 2149-1236.37, stacked at 2137-2124.88, This makes the 1237-1236 area a focus of support.

S&P 500 has immediate intraday support 1224-1219.80, then 1220-1214.69

Resistances:

The Nasdaq has a focus of resistance 2150-2154, this is an overlap of two layers of resistance 2134-2154 and 2150-2165, next layer of resistance is 2170.99-2192.

S&P 500 has immediate intraday resistance 1224-1229.11. A close above 1229.11 would be a short-term bullish move, next resistance is from all the way back in the spring of 2001 at 1232-1286.62 with a focus of resistance 1249.23-1267.

Supports of significance: Nasdaq: 2128-2115.57; S&P 500: 1222-1212.11

Nasdaq support: at 2137-2124.88 overlaps the support of significance, so 2124.88-2115.57 is a focus of support.

Next support is 2106-2085.

S&P 500 has stacked supports 1222-1212.11 then 1210.49-1199.03. Usually, prices have a difficult time pushing down through stacked supports.

Disclaimer: Use of the information provided by Cherney Market Analysis, Inc., is subject to the Terms of Use contained on its website, paulcherney.com. Cherney is president of Cherney Market Analysis


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