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Today's Technical Outlook-7/18/2012

Market Summary

David Chojnacki S1F Market Technician

The Market bounced up at the open and then quickly sold off when Bernanke began to speak. No mention in his notes of QE3 soured the equity market. The averages did find support late morning and then had a good run into positive territory, which held into the close. At the close, the DJIA added 0.6%, the S&P gained 0.7%, and the Nasdaq100 was up .57%. Breadth was positive, 2 to 1, on average volume. The averages once again traded in narrow technical ranges. This is a story that has been re-written for many days now. A small improvement to RSI's and ROC(10's) were negative, but rising for the DJIA and S&P. For the Nasdaq100 the ROC was continuing to decline. The S&P found support just below its 50% retracement level and closed right at the 1363 resistance level. The S&P spent a good part of the day trading near the 1363 area. We see no indications at the present time to move the S&P out of the wider current range of its 200D-SMA(1309) and 1375. Near 1309, we also have a longer term trend line which is critical for support. Look for near term levels of 1325 and 1375 to provide near term support and resistance. The Nasdaq100 traded in a technical range between its 150D-SMA(2559) and 2600. It did close just above its 20D-SMA(2589), showing some improvement in near term strength. The Nasdaq100 remains considerably below its 50% retracement level of 2621. Look for the Nasdaq100 to find support at 2575 and 2550. Upside resistance is now 2600 and 2612, near term. The VIX closed off 3.6% to 16.48. It is very near the same level it was last year prior to the steep fall-off, which began the last week of July. Today we see more Earnings, Bernanke again, and more housing data. Futures are down versus fair value this morning.

Major Economic Reports Today

Housing Start/Building Permits-8:30am Crude Inv.-10:30am Fed's Beige Book-2:00pm

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