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Today's Technical Outlook-4/16/2012

Market Summary

David Chojnacki S1F Market Technician

The Market continued to exhibit the weakness on Friday that initiated at the beginning of the week. A late sell-off left the indices closing near their lows of the session. At the close on Friday, the DJIA was off 1%, the S&P lost 1.2%, and the Nasdaq100 was the biggest loser, dropping 1.5%. Breadth was decidedly negative, 3.2 to 1, on average volume. Volume this week was heavier on down days. For the week, the S&P lost 2%, the DJIA giving up 1.6%, and the Nasdaq100 losing 2.3%. After a weak start to the week, the averages tried to bounce back, but were unable to gain parity. The indices broke below some key technical levels during the week, and at one point the S&P was off the recent highs by as much as 4.2%. The DJIA and S&P broke below their 20 and 50D-SMA's during the week. The Nasdaq100 fell below its 20D-SMA. MACD's continue below signal and are declining. We traded within technical ranges during the week, suggesting that fundamental money is sitting on the sidelines. It appears that we are in a fourth wave correction which could test the 1340 level in the S&P. Should this scenario play out, we would see a fifth upside wave to complete the rally which started in Oct. '11. The VIX increased significantly last week, up 17%. The increased volatility was reflected in the action of the major indices during the week.

MAJOR INDICESShort term support and resistance level
DJIA

close 12849

SP500

close 1370

N100

close 2698

12810 12994 1370 1375 2695 2700
12724 13000 1363 1376 2688 2712
12715 13085 1358 1385 2675 2725
12700 13125 1353 1388 2662 2737
12600 13250 1350 1397 2658 2744
12500 13264 1343 1400 2650 2750
  13300 1340 1412 2637 2762
    1337 1419 2625 2775
      1425   2784

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Major Economic Reports Today

Retail Sales-8:30am Empire Manufacturing-8:30am Net TIC Flows-9:00am Business Inv.-10:00am NAHB Index-10:00am

Long term, upside bias remains intact for all three major indices. Short term, technicals are breaking down as MACD's continue below signal and declining. The DJIA and S&P have broken below their short term moving averages, keeping bias to the downside. In the near term, the S&P found support Friday at the key technical level of 1370. There is resistance at 1385-88, with the bias above this level to the upside. Below the 1370 area bias is to the downside. Earnings season continues and investors will monitor closely. There are several key economic reports this week, including Retail Sales today. Early Futures are slightly higher versus fair value this morning.

Trading Trends

David Chojnacki S1F Market Technician