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Today's Technical Outlook-5/7/2012

Market Summary

David Chojnacki S1F Market Technician

Concern over the Employment Report sent stocks down right from the open. The major indices remained weak going into the close and closed near their lows of the day. The Nasdaq100 was the weakest of the indices and lost 2.4% on the session. At the close on Friday, the DJIA was off 1.2% and the S&P lost 1.6%. Breadth was negative, 3 to 1, on average volume. For the week, the S&P lost 2.4%, the DJIA gave up 1.4%, and the Nasdaq100, the big loser, giving up 3.7%. The DJIA moved to a new high early in the week, however, the other major indices were unable to follow. In the second half of the week the Nasdaq100 lead the indices to the

Trading Trends

David Chojnacki S1F Market Technician

Long term, upside bias remains intact for all three major indices. We have seen the failed breakout last week in the DJIA, lead to a deterioration of the short term technicals. The indices have moved back into the range that they had been trading in for several weeks. The short term bias seems to want to stay in a sideways trade. It looks like more of the fourth wave consolidation. Near term, last week's weakness may extend as we go back into the previous range trade. Not much in economic reports this week, but there will be some attention to Europe. Early Futures are lower versus fair value, indicating some weakness at the open.

MAJOR INDICESShort term support and resistance level
DJIA

close 13228

SP500

close 1403

N100

close 2741

13125 13250 1400 1412 2737 2750
13036 13264 1397 1419 2725 2775
13031 13300 1388 1425 2718 2784
13000 13400 1387 1437 2712 2788
12810 13500 1383 1440 2700 2800
12724 13625 1375 1450 2688 2812
12715   1363 1475 2675 2825
    1358 1500 2662  
    1353      

Major Economic Reports Today

Consumer Credit-3:00pm

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downside. RSI's moved down to the low 40's and ROC(10's) declined. The averages dropped below their short term moving averages and MACD's are below for the Nasdaq100 and S&P. The month long sideways trade has left moving averages to converge and other technicals indicators to narrow. A failed breakout in the DJIA, and the inability for the S&P and Nasdaq100 to confirm, may have been a failed fifth wave. We may continue an extended fourth wave of consolidation. Critical support levels for the S&P will be the recent low of 1358 and 1340.