Sideways Prices Are Likely
By Paul Cherney
Just after Tuesday's market closed, Cisco Systems (CSCO ) announced earnings that were "in line" with expectations on a pro forma basis. This in and of itself is pretty worthless to the markets because that is what they expected and the stock saw weakness just after the announcement. What management says in the conference call might cause opinions to become more defined.
Downside appears limited, but the potential for upside also appears limited.
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.
I am taking vacation from Wednesday, Aug. 8 through Monday, Aug. 13. "Cherney On the Market" will return Tuesday, Aug. 14. Good luck in the markets.
Cherney is Market Analyst for Standard & Poor's