By Paul Cherney
Cisco Systems (CSCO ) will announce earnings after Tuesday's close and the announcement will probably determine the course for tech-related stocks for the next three to five trade days.
Downside appears limited, but the potential for upside also appears limited.
In Friday night's overnight systems run I had two negative signals for the NASDAQ and two negative signals for the S&P 500. These are short-term systems which are driven by oscillators which combine price with volume. The current readings are short of readings which occurred in August of 2000 when the market managed to edge higher through most of the month, so I am beginning to have doubts about my expectations that a modest trend higher could develop this month.
At this time I only have signals which usually accompany short-term weakness -- I have nothing that suggests hard down, so I am forced to guess that prices might simply continue to meander sideways, unable to generate real capitulation selling, but also unable to generate a thundering bullish stampede.
The NASDAQ is testing support in the 2040-2016 area. If the 2016 level breaks the next support is 2003-1963. Immediate resistance starts to become thick in the 2047-2061 area. The next resistance is the 2069-2105 area. Brick wall resistance is 2137-2181.05 and this is the likely area for some profit-taking (if the index ever manages to move into this zone).
The S&P 500 has stacked supports from 1207 through to 1190. The next support is 1184-1174. The index has resistance 1217-1223. Brick Wall resistance is 1227-1242.)
Cherney is Market Analyst for Standard & Poor's