Indicators Point Lower

The bears are outnumbering the bulls, and the S&P 500 has risk for a test of the 878-869 area

By Paul Cherney

Indicators based on Tuesday's end-of-day data are negative for both the Nasdaq and the S&P 500.

Based on "retracement" comments made in the previous column, the Nasdaq has downside risk for prints in the 1355-1327 area.

The S&P 500 has now printed below the 894-892 area (mentioned in the previous column), so the bears are out-numbering the bulls and the index has risk for a test of the 878-869 area.

The potential for retests of the Nasdaq 1355-1327 and the S&P 500 878-869 areas carry no time limitations.

The specter of war looms large on the horizon and many people are content to watch from sidelines as evidenced by the modest total trading volume.

Obviously, some sort of a peaceful resolution to the Iraq situation will bring buyers to the markets for a couple of days, but the real problem the markets have is corporate earnings growth. While a peaceful resolution of the Iraq situation is not really going to do anything for earnings, it should produce a more positive psychological attitude which can't hurt.

Maybe non-tech companies will have better things to say about the potential growth of future earnings and investors who abandon tech stocks might move into other non-tech industry groups which might help sustain prices for the major indexes.

Cherney is chief market analyst for Standard & Poor's

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