A thin haze of uncertainty has descended on Wall Street this afternoon as the key averages continue to drift sideways. But rather than the usual geo-political nervousness that we've become so familiar with in recent weeks, today's lack of direction seems to be more technical-related. Traders are paying a lot of attention to key levels of overhead resistance on the Dow and NASDAQ - both of which traded to new multi-month highs this afternoon. That's a clearly positive sign for the bulls. However, the Dow's inability to maintain its gains has many observers wondering whether the index may have traced a triple- top pattern (formed by the March 21st, April 7th, and April 23rd highs).
The NASDAQ already made a clean break from its own area of intermediate-term resistance at 1425-1430, thanks to yesterday's solid rally. Continued bullish momentum carried the index to an intra-session high of 1468. The subsequent reversal might constitute a failed test of the 2003 highs.
But lest I sound too bearish, it's important to note that follow- through is needed to confirm the Dow/NASDAQ rollovers. Bulls will point out that the three major indexes are doing a fine job of maintaining yesterday's gains. And furthermore, the S&P 500 has traded to new multi-month highs with no horizontal resistance until 930. That's roughly 1.6% from current levels.
As far as this afternoon's trading is concerned, those aforementioned intra-session highs might keep a lid on any late rally attempts. The tech sector in particular will have trouble extending its gains while the SOX.X and GSO.X hold below resistance at 350 and 111, respectively.
Also sitting just below resistance is the BTK.X biotech index, which has moved higher on positive earnings news from sector leader AMGN.
BTK.X biotech index - daily chart:
Biotech companies ABGX and AFFX will report their quarterly results after the bell today. Other tech earnings include KLAC, QCOM, SEBL, SYMC, and VRTS. Dow components IP and SBC announce tomorrow morning.