By Paul Cherney
Intermediate term technical measures are neutral with only a slightly negative bias after last week's price action (these are momentum based and will lag turns in the market by two to five trade days).
Another day of consolidation close to current levels would surprise no one. There should be a positive bias though because if the markets really wanted to sell-off they would have been able to push prices lower in Monday's session.
Sentiment in the marketplace is being bombarded by several events (or lack of events):
1) The Fed has performed the most aggressive easing in its history and there has been little improvement in the economy and/or equity prices.
2) Expectations for a turn around in corporate earnings are not being satisfied by proclamations of robust corporate earnings.
3) Some investors have become unnerved by the Enron debacle and are questioning the validity of earnings numbers which in turn raises questions as to what really are the valuations in this marketplace (P/E ratios).
The Intermediate term view: The Nasdaq has intermediate term support of 1965-1853. There is a focus of support within this zone at 1883-1867. The Nasdaq has immediate intraday support 1925-1913. The index has considerable resistance is 1942-1985.83 with the first focus of resistance 1942-1966. There is a thicker layer of resistance 1966-1986 and then stacked right on top of the 1986 there is resistance 1977-2018 which makes the 1977-1986 level a focus of resistance. Upside appears limited right now. Any advance will probably be labored, full of fits and starts and unable to post significant gains.
The S&P 500 index has a small layer of immediate intraday support 1129-1123. Well-defined intermediate term support is 1111-1052. The index has resistance 1138-1151 which is part of a broader band of resistance 1138-1159. I think prices will drift higher in Tuesday's trading. I think it would take prints above 1139.50 to force some short-covering.
Cherney is market analyst for Standard & Poor's