David Chojnacki S1F Market Technician
After two days of post-election moratorium, the Market finally caught a bid and finished slightly to the upside. Weakness abounded in the Market and selling picked-up across our trading desks. At the close, the DJIA added just 4 points, the S&P tacked on a miserly 2.3 points, and the Nasdaq100, the strongest, up 11.5 points. Breadth was slightly negative, on average volume. For the week, the DJIA lost 2.1%, the S&P gave up 2.4%, and the Nasadq100 dropping 2.7%. Last week's election was the big Market driver and projected increases in dividend and capital gains taxes weighed on the indices. The Nasdaq100 hit the 10% correction level and finished Friday just above that level(2578). RSI's are close to oversold levels, so we may see a brief bounce. The DJIA dropped below its 50 week(NYSE:SMA) and along with the S&P are now seeing weak long term technicals. The Nasdaq100 has also moved below the 50 week level and has already confirmed a longer term breakdown. The Nasdaq100 has some support near the 2525 level. The S&P and DJIA are about to confirm long term breakdown and a 10% correction in the S&P would take us down to the 1319 level. Near term it has support near the 1371-1375 area. This week we get some information on inflation, as we get PPI and CPI numbers, along with FOMC minutes.
David Chojnacki S1F Market Technician
Long term, theNasdaq100 has confirmed a long term breakdown and has substantiated a 10% correction. The DJIA and S&P have violated several support levels and we look for a confirmation this week. Expect them to follow the Nasdaq100 to a 10% correction. Short term the bias continues to the downside for all indices. Near term, we are approaching over-sold conditions and we may see a slight bounce, similar to what happened on Friday. We will watch the Nasdaq100 this week, to see if the 10% correction exhausted its downward trend, however, we believe there is still further to go. The VIX has not reflected the weakness in the Market, though it gained slightly on Friday to finish the week at 18.61. Futures are up slightly this morning versus fair value.
|MAJOR INDICESShort term support and resistance level|
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