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Today's Technical Outlook -10/08/2012

Market Summary

David Chojnacki S1F Market Technician

The Market opened to the upside buoyed by the morning's Employment Report. After the first hour, the indices hit their highs of the day. As the details of the Employment Report were digested the exuberance wore off and the Market began to sell off. At the close on Friday, the DJIA added 34 points, the S&P lost 0.47 of a point, and the Nasdaq100 dropped 16.6 points. Breadth was positive, 1.3 to 1, on weak volume. For the week, the DJIA gained 1.2%, the S&P added 1.3%, and the Nasdaq100 a 0.4% addition. It was a fairly moderate gain for the indices last week, but what was notable was the extreme lack of volume. The DJIA closed Friday at the highest level since 2007. The other major indices did not follow and are still below their recent highs. They have been hurt by the recent poor performance of AAPL. AAPL has pulled back 6.8% from its recent highs. This week we have little in the way of economic news; the highlights are the Fed's Beige Book on Wednesday and PPI on Friday. The Market will be looking at the start of 3rd quarter earning's season this week. While expectations have been lowered, the indices are poised to move to new highs if there are no major disappointments. Since June we have been in a slow melt-up, with the S&P and Nasdaq100 up 14%.

Trading Trends

David Chojnacki S1F Market Technician

Long term, the bias remains to the upside, as we continue firmly above long term technical indicators. Short term the upside bias continues as we remain within the up-trending channel which began in early June. Some of the weakening in short term technicals has subsided with last week's strength. Near term, the reversal last week has put the near term bias back to the upside and we are poised to test the recent highs. The DJIA has already hit that milestone. We will be looking for the S&P and Nasdaq100 to follow and confirm. The mantra for now is to not fight the FED and investors are looking for better return in equities. There is probably some trepidation with the election outcome, which is keeping volumes down. Futures this morning are lower versus fair value.

MAJOR INDICESShort term support and resistance level
DJIA

close 13610

SP500

close 1460

N100

close 2811

13596 13625 1450 1462 2800 2812
13525 13653 1448 1465 2795 2822
13497 13700 1440 1475 2775 2825
13400 13800 1437 1488 2772 2837
13338 13930 1425 1500 2762 2850
13279 14198 1422 1504 2750 2864
13278   1412 1512 2725 2875
    1400   2712 2878
    1388   2700 2888
Click to enlarge

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ALL PRICES NOTED IN THIS PUBLICATION ARE AS OF THE CLOSE ON TRADING PRIOR TO TODAY'S DATE, UNLESS OTHERWISE INDICATED

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