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Today's Technical Outlook 7/23/2012

Market Summary

David Chojnacki S1F Market Technician

In what was looking like a good week for the Market, suddenly got somewhat derailed on Friday. The indices were down right from the open and gradually degraded during the day. At the close on Friday, the DJIA was off 0.9%, the S&P down 1%, and the Nasdaq100 losing 1.4%. Breadth was negative, 2 to 1, on a big increase in volume. The volume is most likely attributed to options expiration. Despite Friday's large loss, the major indices finished the week with gains. For the week, the DJIA ended with 0.3% gain, the S&P up 0.5%, and the Nasdaq100, the big winner, with a 1.3% move to the upside. RSI's remain in the low to mid 50's, continuing the near term strength and MACD's remain above signal. We tested the upper end of our trading range and pulled back on Friday. We established a large bearish candle on Friday and closed at the lows. We'll look for signals on Monday to determine if we are headed back to the bottom of range or a renewed push to move through the top. For the S&P, we see the trading range to be its 200D-SMA(1313) to the 1375 area. The similar range for the Nasdaq100 is 2501 and 2660. While there was strength in tech stocks last week, Financials did not participate. We watched the Nasdaq100 close just below its 50% retracement level on Friday, indicating that perhaps there is some more weakness to come.

Long term, the indices continue to hold longer term technical support, and bias remains to the upside. Once again we saw short term technicals strengthening last week as the indices moved to the top of their recent trading range. A push through those levels would move the bias to the upside. For now it remains neutral in the current trading range. Near term technicals improved dramatically and bias turned to the upside. With Friday's pullback from range top, we may see more consolidation before resuming their upward move. Economic reports will be light this week, however, earnings will be in full swing. Headlines from Europe, specifically Spain, are keeping Futures down significantly early this morning. Though the VIX level continues low, we continue to see some wide swings.

Major Economic Reports Today

No reports scheduled

MAJOR INDICESShort term support and resistance level
DJIA

close 12822

SP500

close 1362

N100

close 2618

12810 12837 1353 1363 2612 2621
12751 12900 1350 1365 2600 2625
12741 12944 1348 1375 2594 2637
12724 13000 1342 1388 2588 2650
12615 13125 1337 1400 2575 2660
12507 13279 1333 1405 2566 2675
12500   1332 1412 2562 2688
12400   1325 1419 2550 2700
    1319   2525 2712

DISCLAIMER LANGUAGE

ALL PRICES NOTED IN THIS PUBLICATION ARE AS OF THE CLOSE ON TRADING PRIOR TO TODAY'S DATE, UNLESS OTHERWISE INDICATED

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David Chojnacki S1F Market Technician