David Chojnacki S1F Market Technician
It was another narrow traded session, on weak volume, with the averages weakening as the session wore on. At the close, the DJIA was down 0.47%, the S&P off 0.77%, and the Nasdaq100 losing 1.1%. Breadth was negative, 2.3 to 1, on weak volume. Technicals lost ground in the session as everyone awaited today's Employment Report. RSI's lowered and ROC(10's) while positive, declined in the session. Bias remains to the upside for the short term, but is mixed for the near term. The S&P joined the DJIA, having its 20D cross below its 50D-SMA. The major indices continue to hold key short term levels, but with the convergence of indicators, caution needs to be exercised so you do not get caught up in 'whipsaw' action. The DJIA dropped back below its recent highs, but held key levels. Look for support to be at 13125 and 13060. Resistance on the upside exists at 13279 and 13300. The S&P held key levels even though its 20D dropped below its 50D average. We now see support at 1388-85 level and at 1375. On the upside, 1397-1400 and 1412 present near term resistance. The Nasdaq100, the weakest in the session, developed an 'engulfing bear' candle, and dropped below its 20D-SMA(2708). This presents some concern as it has been the leader since the 2009 reversal. We will closely monitor indicators in the next few sessions to see if it is part of the whipsaw activity or a weakening trend is building. Support is now at 2697 and 2688. We see near term resistance to be at 2712 and 2725. The VIX was up 4% to 17.56, remaining relatively tame. The Employment Report is before the bell and should impact the opening. Early Futures are slightly lower versus fair value.
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