By Paul Cherney
Investors are on a psychological seesaw right now. The earnings front remains a dark cloud casting a shadow on the market, but the Fed's easing posture neutralizes the earnings concerns (the Fed wouldn't be lowering rates if everything looked rosy).
There is an air of caution for many tech investors as they await Cisco's (CSCO ) earnings report and guidance due after the close on Tuesday (2/6), but the market had ample opportunity to head lower in Monday's session and the sellers didn't get panicked into parting with their shares. There is a good chance that Tuesday could postive closes for the Nasdaq and the S&P 500.
The Nasdaq is testing immediate support in the 2644-2576.95 area. Unless there is a headline of undeniably bearish importance, I think this area will hold for Tuesday and any dip in prices into the 2630-2614 area should find buyers ready to move in. The next layer of support for the Nasdaq (which was briefly tested in Monday's session) is 2604-2576.
Immediate Nasdaq resistance is 2686-2743.
The S&P 500 is testing a focus of resistance in the 1353-1368 area. The index has broad and substantial resistance 1351-1389. The index has support in the 1350-1342 then 1335-1325.
Here is a worst case scenario for the next couple of trade days (I doubt a break of 2576 will unfold.) The Nasdaq's low print on 1/16/01 was 2576.95 and prints in this area (if they occur) should bring buyers to the market and reverse prices for a rebound BUT, if 2576 breaks, downside risk opens for prints below 2520.
Cherney is market analyst for Standard & Poor's