Sideways Action Continues

Investors are still reluctant to commit to buying ahead of first quarter earnings reports

By Paul Cherney

Earnings estimate reduction for Cisco Systems (CSCO ) and negative comments including earnings estimate reductions for some components of the integrated telecom group (prominent members include VZ , BLS , SBC ), rekindled doubts about being long in the first quarter reporting season and kept sellers in command in Tuesday's session.

Until the markets demonstrate the ability to overcome resistance levels, I have to assume sideways action with a negative bias. Investors still have a reluctance to commit to the long side ahead of the first quarter earnings reports. But I would change my opinion if the NASDAQ closed above the 1805 level, or if the S&P 500 closed above 1136.

Immediate NASDAQ support is now 1733-1696. The S&P 500 has a focus of support 1119-1113. Immediate intraday resistance for the NASDAQ is 1770-1803, then 1808-1822.

The S&P 500 has immediate resistance 1124-1136, with a focus 1126-1133, then 1142-1157. The S&P 500 has immediate support 1124-1106, with a focus 1119-1113.

There was one potentially good development in Tuesay's market: Volume started to push higher, maybe the sellers are getting anxious to get out and there will be some sort of a capitulation.

Cherney is market analyst for Standard & Poor's

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