Today's Technical Outlook - 11/19/2012

Market Summary

David Chojnacki S1F Market Technician

Friday's session began with the Market moving down in the AM hours to new lows in this current pullback. Just before noon the indices caught a bid and began to move back above some key supports levels. All three major averages hit near the bottom of their Bollinger Bands and reversed to finish positive at the close. At the close, the DJIA rose .37%, the S&P added .48%, and the Nasdaq100 was up .39%. Breadth was positive, 2.9 to 1, on significantly higher volume, partly attributed to options expiration. The averages did not perform well for the week, as the DJIA gave up 1.7%, the S&P lost 1.4%, and the Nasdaq100 dropped 1.9%. All three averages are now below their 50week-SMA and continue below the 50% retracement level. There were some encouraging signs from Friday's mid-day reversal in that the S&P and Nasdaq100 closed above some key support levels. The S&P moved back above 1349-50 and the Nasdaq100 closed above 2525. If we can hold these levels, there may be some pause in the pullback, as all three major indices are near an over-sold condition. We also had 'Hammers' develop on Friday for each of the indices, signaling a possible near term reversal. The Nasdaq100 is now down 11.5% from its September high and the S&P is off 7.2%. In a holiday shortened week, we get some housing data and Leading Indicators.

Trading Trends

David Chojnacki S1F Market Technician

Long term, all three major averages have confirmed a longer term pullback and bias is to the downside. We expect the S&P and the DJIA to follow the Nasdaq100 down to 10% correction levels. Short term the bias continues to the downside for all indices. Near term, Friday's mid-day reversal, left some hope that we may see a pause in the sell-off and see some consolidation before we either get a reversal or move toward the June lows(Nasdaq100- 2458, S&P- 1278). The VIX continues to defy the Market weakness and has not reflected the Market's poor performance. It closed Friday at 16.41, remaining in a relatively tame volatility level. Futures are up this morning versus fair value.

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