A lukewarm report from Intel tonight, but IBM’s and Microsoft’s reports on Thursday night will probably be more important. Intel’s capex spending cuts could hurt chip equipment stocks, however, which are weighted heavily in the SOX, the semiconductor index (first chart below). With the SOX in danger of forming a head and shoulders top here, that could be a significant negative. Unfortunately, the rally as a whole seems to be “wedging out” (see Dow, S&P and Nasdaq charts below), and on declining volume too, which suggests more downside risk than upside potential at current levels. The equity-only put-call ratio remains unsupportive at the .54 level, and the VIX and VXN, the options volatility indexes, are showing complacency too (see bottom two charts below). Also, the big drop in new highs (from 100-69 on the Nasdaq) was a negative divergence today. The Dow faces resistance at 8900-8909, and 8750-8800 is support. 925 is important support on the S&P, and 937 is resistance. The Nasdaq has resistance at 1480, and support at 1440-1449 and 1430.
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