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Earnings Reports Take Market Nowhere Fast

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Funadamental news -- and reaction to it -- will drive indexes.

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Editor's Note: This post is by Bryan McCormick, of OptionMONSTER.

Yesterday was quite a day, as far as levels testing was concerned. I didn't go as far as to test down to the supports, which the index futures suggested we'd reach.

Actually, the lows in the futures were never met in the cash indexes. Instead, markets opened near the session lows, well above where the futures had indicated they would open, and ground higher all day. What we did hit were most of the resistance levels, I noted yesterday morning.

For today, that means having to roll my support and resistance levels higher, with the exception of the NASDAQ 100 (NDX), which keeps the same resistance level as yesterday. None of the new levels exceed any of the levels we saw last week.

We're actually now flip-flopping, for lack of a better description, between the lows and highs of last week without making a great deal of progress one way or the other. The reason for this is that the sum of earnings reports are adding up to a bit of a "null" event so far: Not weak enough to break indexes down, but not strong enough to break them out, either.

I will also be repeating the following each day as we are now in earnings season: It's far too easy to forget how critical earnings season is to pricing. Although levels will continue to be important, it is the fundamental news and the trader reaction to it on an individual company basis that will begin to draw attention and become dominant. The shape and level of the indexes will be determined by those results rather than pure technicals, which have worked so well for the last month.

Traders should be prepared for a possible wave of pre-announcements from companies as we head toward earnings reports deeper into April. These could be positive or negative, and are always an additional wild card in either direction. Be aware that these sorts of announcements can come at any time without warning, well ahead of a scheduled earnings date.

NASDAQ 100

First support is at 1309.37. First resistance is now at 1353.92.

For the NASDAQ 100 Index Tracking Stock (QQQQ), first support is at $32.24. First resistance is at $33.31.

S&P 500 (SPX)

First support is now at 832.39. First resistance is at 858.55.

For the Standard & Poor's Depository Receipts (SPY), first support is at $83.43. First resistance is at $85.94.

Russell 2000 (RUT)

First support is now at 461.13. First resistance is now at 473.87.

For the iShares Trust Russell 2000 Index Fund (IWM), first support is at $46.10. First resistance is at $47.33
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No positions in stocks mentioned.

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