By Mike Paulenoff, MPTrader.com
In the early part of the session we've had a two-way market in a very narrow range. On one hand, you had a load of earnings reports coming out this morning, and all of them were impressive year over year, which doesn't surprise anybody. I guest you can extrapolate from that that it didn't surprise investors either. So there was really no upside oomph associated with the impressive earnings reports from this morning.
After the first 15-20 minutes of trading when everyone realized that the earnings reports in and of themselves weren't going to generate additional sustainable upside, the indices sold off a bit . But in doing so the indices demarcated particular prices both on the high side of a range and the low side of a range, which have contained all of the action for the day's trading.
So it seems at this point in the day that the market will remain in that range until Intel's (INTC) earnings come out after the close, at which point investors will pop the indices up to new highs for the entire recovery since last March or they will find a reason to be totally disappointed based on Intel. Intel has a way of doing that -- - moving the market to the next level or disappointing it.
On the E-Mini Nasdaq, the key level is 1406. If that breaks I think you have a significant crack in at least the last 5-6 day up-move, which started at about 1370 and ended at 1421-22. With that in mind, 1406 is the key level, and if that holds we'll probably go up and make new highs. If it doesn't hold, I think it's a poor response to the Intel earnings.
For traders of the QQQs, they're naturally trading in a similar way to the E-Mini Nasdaq, but, specifically, the key level is 34.96. A break of 34.96 should initiate downside acceleration, which should extend into the 34.80 to 34.70 level. If there is no break of 34.96, then we could find ourselves popping to the upside again into the 35.40-.50 area, which is my next upside target zone.
On the E-Mini S&P a similar situation has developed. Basically, you have 1039 being the key support level. If that breaks I think there's a good chance of going down to 1030 in a hurry, and then perhaps even to last Tuesday's pivot reversal at 1024. On the other hand, if 1039 is not broken before the end of the day, and Intel's earnings are reacted to positively, then we could find ourselves above 1050 in the aftermarket and into tomorrow's opening.