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Today's Technical Outlook-5/17/2012

Market Summary

David Chojnacki S1F Market Technician

After the recent pullback, prices bounced to the upside yesterday during the morning hours. The indices were up nearly 1%, before they lost their strength and began to decline. The steady sell-off held into the close and the major averages closed at new lows, which were at the lows of the session. Greece and a possible run on their banks, continues to weigh on the Market. At the close, the DJIA was down 33 points, the S&P off 0.44%, and the Nasdaq100 down 0.74%. Breadth was negative, 2 to 1, on average to just above average volume. The indices made new lows for the current pullback, which began on April 3rd. RSI's for the Nasdaq100 and S&P closed just below 30 at 29.8 and 29.6 respectively. Thirty is typically the level where we begin to look at an over-sold condition developing. The DJIA RSI closed at 31. We have recently noted that there should be fairly good short term support at the 1320-1325 area in the S&P. Yesterday, we closed right at 1324.8, which just happens to also be the lower Bollinger Band level of support. 1320 is a .38 Fibonacci retracement, from the April high primary motive wave. Below that level(1320), we begin to encroach on longer term support levels, such as the 150D-SMA, which is at 1312. Upside resistance is now at 1337 and 1343. The Nasdaq100 also closed at a new low and near its low of the day. There appears to be some fairly formidable chart support near 2550, with lower Bollinger band support level at 2552. With the indices near some important support areas and becoming oversold, we would expect some type of near term bounce in the next few sessions. The VIX closed up 1.3% to end the day at 22.27, as more volatility creeps into the Market. Futures are flat versus fair value in the early going.

Major Economic Reports Today

Initial/Continuing Claims-8:30am Phila Fed-10:00am Leading Indicators-10:00am



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