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Today's Technical Outlook-7/2/2012

Market Summary

David Chojnacki S1F Market Technician

It was another headlines news move, as news out of the European summit pushed the Market to one of its best days this year. At the close, the DJIA gained 2.2%, the S&P was up 2.4%, and the Nasdaq100 added 3.1%. Breadth was decidedly positive, 6.7 to 1, on heavy volume. Friday was also one of the few days this year that we had good volume on an up day. For the week, the DJIA was up 1.8%, the S&P gained 2%, and the Nasdaq100 added 1.1%. Near term technicals improved dramatically with RSI's now in the upper 50's and ROC(10's) positive and advancing. The indices moved above short term technical averages and have once again held their longer term technical strength. We ended the session right at the top of the recent trading range(1363 for the S&P) and this holiday shortened week will be critical in confirming that we indeed have a reversal in short term technicals. The 1319 Fibonacci level in the S&P is key in determining an upside bias. Look for the S&P to meet resistance at the 1363 level, but if we move out of the recent range, the indices may be prepared to test the April highs. For the S&P, the April closing high is 1419 and 2784 is the Nasdaq100 high. The long Bull candle established on Friday will be difficult to break down and the drop in the VIX only adds credence to the rally.

Trading Trends

David Chojnacki S1F Market Technician

Long term, the indices once again held up technical levels keeping the long term bias to the upside. Short term technicals improved dramatically and we look for confirmation that we can get out of the recent range and reverse the bias to the upside. Short term technicals are indicating the mounting strength in this area and possible move to test the April highs. Near term, a big move last week put the indices right at the top of the recent range. Strong RSI's and positive MACD's indicate that the near term strength may last the remainder of this week. With the Employment report this Friday and the holiday shortened week, trading may be light till the end of the week. Futures are flat this morning.

MAJOR INDICESShort term support and resistance level
DJIA

close 12880

SP500

close 1362

N100

close 2615

12837 12900 1353 1363 2612 2623
12810 13000 1350 1375 2600 2625
12724 13125 1340 1388 2588 2637
12715 13250 1337 1400 2587 2650
12700 13279 1330 1405 2575 2662
12669 13339 1326 1412 2562 2675
12566   1325 1419 2554 2688
12500   1320   2550 2700
12400   1319   2525 2712
Click to enlarge

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