The Cisco Trade
By Paul Cherney
Expectations for a close in the S&P 500 which was higher than Friday's close have been fulfilled.
Intermediate term indicators (intermediate term for my intraday calls) are at neutral (no call, not predictive) levels.
A positive bias remains in place (based on daily bar charts) for both the S&P 500 and the Nasdaq. On both Monday and Tuesday, neither the Nasdaq nor the S&P 500 were able to hold onto lion's share of gains in heavier volume which is not the most bullish of chart patterns, but the fate of the markets is in Cisco's (CSCO ) hands (the tech bellwether reports results after the close of trading Tuesday).
Last year, Cisco made comments which the markets interpreted positively (after the close on May 7, 2002) and on the following trade day, the Nasdaq jumped 7.78% and the S&P 500 climbed 3.75%. Don't expect anything like that, but a positive reaction from the markets could easily push prices sharply higher and into the focuses of resistance mentioned below. Traders would probably view such a move as a selling opportunity.
Resistances: Nasdaq resistance above 1521.44 is 1543-1595, with a focus of 1547-1568.
The price action surrounding the highs in December, 2002, and January, 2003, for the S&P 500 has created some pretty consistent resistance in the 930-935.05 area. The next resistance (established in August, 2002, and the beginning of July, 2002) is 944-965, with a focus of 951-957. The resistance starts really at 939 but it does not become organized (consistent sideways price action) until 942-965, especially strong resistance with prints of 951-957.
Supports: Immediate intraday support for the S&P 500 is 932-928, then 924-918, then 915-910.
Immediate support for the Nasdaq is 1517-1510, then 1500-1491, then 1487-1469.
Cherney is chief market analyst for Standard & Poor's