Intel Exhausted?

“I noted on Sunday how Intel and Cisco appeared to be breaking out of multi-month bases.
On Tuesday I noted key support on SPX at 1,123 - 1,124.

Support held and Intel blew away numbers today. There is meaningful resistance at 1,150. SPX closed today at 1,148.

So tomorrow will either be a story of the Bulls breaking prices out above resistance (probably on a gap Up Open), or the Bulls getting sucked in to the false breakout of an exhausted Market. “

“The old adage is that is it not the news, but how the market reacts to the news that counts. Intel is up in after-hours trading. I assume that it would be a sign of exhaustion by the Bulls if they cannot capitalize on Intel and ramp either it and/or the NASDAQ tomorrow.”

Intel traded over $22 (+ $0.60) in the after-market, but opened Friday trading down and then sold off the rest of the day - closing at the low.

The Dow closed the day down -100 points.

I think that qualifies as exhaustion…

I am watching Intel very closely, because Intel had a nasty Gap Up reversal in its last earnings release (Blue Arrow). Semiconductors lead, so it was not a surprise a few days later when SPX rolled over and then had a 7.3% correction in 11 days. QQQQ was -7% over the same period.

I am not saying that the same thing will happen here, but I am watching things closely. The trendlines off of the November 1st low are being tested, but are still intact. A break of these trendline will get my attention and probably stop me out of a few things.


Nine-Day Trading Range
Over the past nine trading days, SPX has been stuck in a fairly violent trading range. You can see that there is big resistance at 1,148 – 1,150 and big support in the 1,122 – 1,127 range.


You can see that there is a lot of support right below here at 1,130 and then a ton of volume in the 1,070 – 1,110 range.


Now how many times have we seen the markets break the uptrend line and then gap up above the obvious stop-loss level for the shorts (Blue Arrow)? Futures are up today, so do not be surprised to have SPX gap up above 1,142 at the open tomorrow.


The NASDAQ (QQQQ) has been in a 14-day trading range. See how over the 20-day (Dashed Line) has held over the last several days of trading (Black Arrows)? That is now obvious short-term support. Next support is not far below here at $44.5. A break above $46.5 is an clear breakout.