Searching for a Headline

The markets will hold out to see more earnings and hear what Greenspan has to say to Congress on Wednesday and Thursday

By Paul Cherney

From Cherney Market Analysis

The measures created in the runup from Thursday's lows (Thursday, July 7, 2005) force me to maintain a short-term positive bias. In the short-run (the next 2 or 3 days), I do no think that prices can make a dramatic fall as the markets hold out to see more earnings and hear what Greenspan has to say to Congress on Wednesday and Thursday. But, due to the summer volumes, I have real doubts about the market's ability to forge much higher than the recent highs. I think there would have to be a headline of indisputably bullish importance to create another big leg higher. If it comes, we'll all know.

Potential headline sources include IBM (IBM ) earnings/guidance after Monday's close (the street expects quarterly EPS of $1.03) and Tuesday after the close, Intel (INTC ; the street expects 32 cents). The North American Semiconductor Book-to-bill Ratio is scheduled to be reported 3:00 pm Pacific Time on Tuesday; that used to be a big headline back in the 1990s.

Greenspan testifies to Congress on Wednesday and Thursday. I do not think that he will hint at any end to the measured pace tightening cycle, but I also think that the markets now accept that reality and will/can react positively to comments of economic strength from Greenspan.

I think I would be wrong about a short-term positive bias if the following immediate support levels were undercut on a closing basis: Nasdaq, 2128-2115.57; S&P 500, 1222-1212.11.

Technical levels have not changed.

Immediate intraday resistance established Thursday, July 14 (still valid):

• S&P 500: 1223.1229.12-1233.16.

• Nasdaq: 2156-2164.18

Immediate intraday supports are:

• Nasdaq support: 2149-1236.37, stacked at 2137-2124.88, This makes the 1237-1236 area a focus of support.

• S&P 500 has immediate intraday support 1224-1219.80, then 1220-1214.69


• The Nasdaq has a focus of resistance 2150-2154, this is an overlap of two layers of resistance 2134-2154 and 2150-2165, next layer of resistance is 2170.99-2192.

• S&P 500 has immediate intraday resistance 1224-1229.11. A close above 1229.11 would be a short-term bullish move, next resistance is from all the way back in the spring of 2001 at 1232-1286.62 with a focus of resistance 1249.23-1267.

Supports of significance: Nasdaq: 2128-2115.57; S&P 500: 1222-1212.11

• Nasdaq support: at 2137-2124.88 overlaps the support of significance, so 2124.88-2115.57 is a focus of support. Next support is 2106-2085.

• S&P 500 has stacked supports 1222-1212.11 then 1210.49-1199.03. Usually, prices have a difficult time pushing down through stacked supports.

Disclaimer: Use of the information provided by Cherney Market Analysis, Inc., is subject to the Terms of Use contained on its website,

Cherney is president of Cherney Market Analysis

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