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Today's Technical Outlook- 5/20/2013

Market Summary

David Chojnacki S1F Market Technician

After a fairly strong opening to the upside, the major averages settled into a sideways trade for most of the session. Near 2 PM a strong buy program commenced and the indices closed at their highs of the session. With options expiring, the volume picked-up and was above average. The DJIA and S&P closed at new all-time highs and the Nasdaq100 closed at over 12 year highs. At the close on Friday, the DJIA was up 0.8%, and the S&P and Nasdaq100 gained 1%. Breadth was decidedly positive, 2.3 to 1, on heavy volume. For the week, the DJIA gained 1.5%, the S&P added 2%, and the Nasdaq100, up 1.5%. Year to date the DJIA is up 17.12%, the Nasdaq100 gaining 13.8%, and the S&P up 16.9%. RSI's remain bullish and have moved into over-bought territory, with RSI's in the low to mid 70's. Once again, we saw economic reports during the week in the form of Housing Starts and Claims Numbers which continued to show a weak economy. This has not phased investors as they continue to chase equities. Investors want to be in the U.S. dollar and dollar denominated equities. Until multiples are extended, we expect this to continue. The ROC(10's) are positive and rising and the ADX once again exhibits strong momentum. The VIX continues at low levels, closing at 12.45 on Friday, not showing any signs of fear.

Trading Trends

David Chojnacki S1F Market Technician

The bias for the long term continues to the upside as technicals remain strong. The major indices continued their move to new highs. Short term technicals also continued to strengthen last week and suggest that there is more of an upside move to the up leg which began in November of 2012. There have been three nearly 3% corrections in this move. At some point we will see a bigger pullback or consolidation, but those signals are not showing up in the technicals. Near term we are clearly over-bought at these levels and may be close to at least a 3% consolidation. Economic reports are light this week, the highlight being the FOMC minutes on Wednesday. Europe is mixed in early trade. Futures are off slightly this morning and giving little indication to the open's direction.

MAJOR INDICES Short term support and resistance level

DJIA

close 15354

SP500

close 1667

N100

close 3028

15300

15400

1662

1673

3025

3037

15250

15450

1650

1675

3012

3050

15125

15500

1640

1688

3000

3057

15000

15525

1637

1700

2988

3062

14952

15550

1625

1712

2975

3075

14887

15600

1613

1725

2962

3088

   

1600

1737

2950

3100

   

1593

1750

2937

 
   

1588

     

Major Economic Reports Today

No reports scheduled

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