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Today's Technical Outlook - 12/31/2012

Market Summary

David Chojnacki S1F Market Technician

The Market opened lower on Friday, than traded flat into the last hour, when prices took another down-turn. The final bell had the indices with moderate losses in the session. At the close on Friday, the DJIA slid 1.2%, the S&P lost 1.1%, and the Nasdaq100 dropping 1%. Breadth was negative, 2 to 1, on light holiday volume. For the week, the DJIA and S&P were off 1.9%, and the Nasdaq1000 gave up 2.1%. Near and short term technicals weakened in the holiday shortened week. RSI's dropped to near 40, ROC(10's) are negative and declining, and MACD's crossed their signal in the week. Once again the averages are testing longer term strength, as the Nasdaq100 and DJIA have slipped below their 200D-SMA's and their 50week moving averages. The Nasdaq100 is particularly of concern since it is below its 50 and 61% retracement levels of the June to September upside rally. While the gains for the year look impressive: DJIA-5.9%, S&P-11.5%, Nasdaq100-14.3%, the averages are back to where they were (or below) at the end of the first quarter of 2012. During the September through November pullback, the VIX remained rather tame and defied the weakness in the Market. Last week the VIX gained 27% to finish at 22.72, demonstrating the volatility and fear that is back in the Market.

Trading Trends

David Chojnacki S1F Market Technician

Long term, we once again have the Nasdaq100 testing longer term technical levels. Will this weakness continue to spread across the other indices? Will the Nadsaq100 confirm the breakdown? These are all questions that won't get resolved in this light volume week. Short term, the bias is turning to the downside, but not yet confirmed for the DJIA and S&P. Near term bias has been to the downside as the indices test the recent lows of the trading range. We have had five straight down days as the Market waits for some kind of fiscal deal. The S&P about to test 1371-75 area and the Nasdaq100 testing 2600. Futures this morning are lower, with no major economic reports. Eyes will be on Washington once again.

MAJOR INDICESShort term support and resistance level
DJIA

close 12938

SP500

close 1402

N100

close 2606

12851 12950 1400 1409 2600 2612
12810 12994 1396 1412 2588 2613
12700 13000 1394 1415 2575 2625
12674 13014 1393 1420 2550 2637
12600 13023 1390 1422 2525 2650
  13069 1388 1425 2512 2652
  13125 1375 1435 2500 2653
  13140 1371 1450   2659
  13300 1362 1465   2661
Click to enlarge

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Major Economic Reports Today

No reports scheduled