| Technical Levels : For the better part of a week now, we've been looking for Nasdaq support in the area of 1,419 to 1,423. For those not familiar, this area is notable because it coincides with three points of interest over the prior five years -- 1) the September 11th-induced reaction lows which bottomed at 1,423, 2) the reaction lows of October 1998 which bottomed at 1,419 and 3) the ordinary course of its original uptrend during the Summer of 1997. While the index came about as close as it could to failure at this key area, it did manage to hold on both an opening and closing basis. Nonetheless, that area did receive a solid test over three consecutive sessions last week -- namely, the June 24th open at 1429, the June 25th close at 1,423 and the June 26th close at 1,429. With the index situated at 1,463 based on Friday's close, there seems to be a decent argument for a flat to higher bias this week. The Nasdaq has not put so much distance on its key support that it's overextended, and catalysts will be somewhat limited over the shortened holiday week. Looking out further towards the full month of July, the focus will begin to turn towards earnings reports rather than earnings warnings. Yet also keep in mind that the intermediate to longer-term trend remains lower unless, or until, we experience a meaningful push higher on strong volume and favorable market breadth. In terms of straight technical levels, look for notable overhead in the area of 1,497 to 1,500 which represents straight-line resistance going back to mid-June. That area is followed by more significant resistance in the range of 1,553 to 1,560. To the downside, watch for modest initial support at 1,440 followed by more significant support in the range of 1,429 to 1,433 and the well documented floor at 1,419 to 1,423. -- Mike Ashbaugh, Briefing.com |
