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Today's Technical Outlook 9/4/2012

Market Summary

David Chojnacki S1F Market Technician

It was another week in August, where the Market traded in a very narrow range on little volume. During the month of August, we saw the major indices trade in roughly a 2% range. On Friday, we saw the indices add to their levels as we go into a new month preparing to make another assault on the spring highs. At the close, the DJIA gained .69%, the S&P added .51%, and the Nasdaq100, up .67%. Breadth was positive, 2.3 to 1, on a pick-up in volume. For the week, the DJIA lost .5%, the S&P dropping .3%, and the Nasdaq100 giving up .2%. We lost some near term strength last week as RSI's dropped off a bit, but still remain in bull territory. ROC(10's) moved into negative territory last week, but did rise on Friday. There is some attempt to diminish short term technicals as MACD's have dropped below signal and the DJIA has closed below its 20D-SMA for the entire week. The chart patterns suggest that we are in a consolidation phase and actually have developed a bullish handle during the month of August. This would suggest that we make another run for the spring highs and break through. The bearish case suggests that the weakening technicals are a sign that we fail a second time to break through the highs and the Market rolls over. As investors come back this week, there will be plenty of economic headlines to influence their decisions.

Trading Trends

David Chojnacki S1F Market Technician

Long term, the bias remains to the upside, as we remain just below the spring and multi-year highs. While the short term bias remains to the upside, weakening in MACD's, the DJIA falling below its 20D-SMA, and a failed attempt to break through the spring highs, flashes a caution signal as we move into the new month. The S&P continues to have support at 1375 and resistance at 1425, just above the spring highs. For the Nasdaq100 we have 2784 providing resistance and support at 2650. Near term technicals have weakened, and we may see some more pullback, but they are still bullish. This week we have the DNC convention, ECB meeting on Thursday, and Job numbers on Friday. Futures this morning are slightly lower versus fair value.

MAJOR INDICESShort term support and resistance level
DJIA

close 13090

SP500

close 1406

N100

close 2772

13000 13125 1405 1407 2753 2775
12940 13133 1400 1411 2750 2784
12900 12158 1394 1412 2725 2795
12888 13279 1388 1419 2712 2800
12810 13338 1376 1425 2700 2812
12724 13400 1375 1437 2688 2825
12600 13500 1365 1450 2675 2837
    1363 1475 2663 2850
          2862

Major Economic Reports Today

ISM Index-10:00am Construction Spending-10:00am Auto/Truck Sales-2:00pm

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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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