David Chojnacki S1F Market Technician
A strong Market on Monday pushed the indices to moderate gains. Whispers that some kind of deal was coming out of Washington took some of the uncertainty out of the Markets and had investors willing to buy. Once the details of the deal are analyzed, Wall Street may have a different mind set. At the close, the DJIA gained 1.2%, the S&P rose 1.6%, and the Nasdaq100 moving up 2%. Breadth was decidedly positive, 4.7 to 1, on above average volume. RSI's spiked and are once again near 50. ROC(10's) continued in negative territory, but advanced in the session. All three major indices established large bull candles and moved back above some key moving averages. We continue to trade within our trading range and straddle both sides of key moving averages. This type of activity can lead to some real whipsaw trading. On Friday of last week the VIX rose 16.6%. In Monday's session the VIX retreated 20%. We have tremendous volatility in the volatility indicator. The DJIA moved above its 50 and 200(SMA's). The Nasdaq100 moved back above its 20 and 50D-SMA's. The S&P closed above its 20 and 50D-SMA's. We have continued to stress the weakness in the Nasdaq100 and after Monday's strong action it could still not close above the 50% retracement level of 2661. While Monday's reversal and strength was impressive, the Nasdaq100 is just a few points above the mid-point of its recent trading range of 2600-2700. Look for support at 2650 and 2625. On the upside, resistance can be found at 2661 and 2675. The S&P closed just one point above the 1425 resistance level, not very convincing. Today's session will either have that level act as support or drop below and it becomes resistance once again. Further upside resistance lies at 1435 and 1450. Additional support is at 1419 and 1415. The fiscal cliff deal has removed uncertainty and is reflected in the much higher Futures this morning. Watch closely today's close.
Major Economic Reports Today
ISM Index-10:00am Construction Spending-10:00am Auto/Truck Sales-2:00pm
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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