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Today's Technical Outlook - 7/21/2014

Market Summary

David Chojnacki, Market Technician

After Thursday's big sell-off, linked to international events, investors came back in looking for bargains on Friday. There were no improvements to the global events on Friday, perhaps they may have even gotten worse, as Israel stepped up its action in Gaza. Regardless, perhaps Thursday's pullback was slightly over-done. At the close on Friday, the DJIA gained 0.73%, the S&P added 1%, and the Nasdaq100 moved up 1.6%. Breadth was decidedly positive, 5 to 1, on above average volume. RSI's moved up, but remain below over-bought levels. For the week, the DJIA was up 0.9%, the S&P gained 0.5%, and the Nasdaq100 moving up 0.8%. It was a week where the DJIA and S&P hit new highs, but the S&P failed to confirm. It was also a week that saw geopolitical events flood the newswires. Volatility and volume picked up in the week, as we saw tremendous volatility even in the VIX. The VIX was up 32% on Thursday, but pulled back 17% Friday to finish at 12.06.

Trading Trends

MAJOR INDICES Short term support and resistance level

DJIA

close 17100

SP500

close 1978

N100

close 3939

17000

17125

1975

1985

3937

3947

16960

17138

1968

1988

3925

3950

16900

17151

1962

2000

3912

3962

16804

17250

1950

2012

3900

3975

16800

17300

1940

2025

3888

3976

16735

17400

1936

2037

3876

3988

   

1925

 

3875

4000

   

1920

 

3862

4012

   

1912

 

3850

 
Click to enlarge

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Major Economic Reports Today

No reports scheduled

Long term trend continues with an upside bias, as the DJIA and Nasdaq100 made new highs in the week. We would expect the S&P to follow and confirm these new highs. The S&P does have important resistance at its one year channel top of just above 2000. Short term technicals remain strong, and only weak MACD's in the S&P and Nasdaq100 suggest any concern. Near term, we would expect additional volatility this week, as geopolitical events and earnings will be at the top of investors lists. We will watch to see if the S&P can confirm the Nasdaq100's new highs of last week. The Nikkei was down overnight and Europe is weaker in early trade. US Futures are pointing to a lower open, but not dramatically lower.