Mixed Signals for Stocks

The markets may have reached a balancing point where prices don't really move significantly higher or lower

By Paul Cherney

Technical measures are offering a mixed view for the markets right now. Weakness in the first part of next week is possible. The markets may have reached a balancing point where prices don't really move significantly higher or lower as particpants exercise some caution ahead of the earnings warning season which usually starts after the second week of June.

Federal Reserve Chairman Alan Greenspan made it obvious in his May 24 speech that the Fed is less concerned about inflation and more concerned about rejuvenating the economy, but I think the markets have exhausted the buying inspired by the aggressive rate cuts this year and there is a growing sentiment that the markets really want to see some tangible proof of the beneficial effects of the Fed's cuts. Upside looks limited. Downside looks limited.

Immediate support for the Nasdaq is 2233-2052, this band of consolidation was created from the end of April through Monday May 21. Within the upper portion of this band of support is a focus of support: 2233-2174. Immediate resistance for the Nasdaq is now 2265-2285 then 2306-2327. Resistance runs all the way up to 2356.

The S&P 500 has immediate resistance 1284-1295 then 1300-1341. Within this layer, there is a focus of resistance 1311-1339. The S&P 500 has immediate closing support in the 1273-1253 area.

Cherney is Market Analyst for Standard & Poor's