Caught in a Range
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Good Morning. This is Capital Essence’s “Market Outlook” (the technical analysis of financial markets) for Friday August 31, 2007.
As discussed in the previous Market Outlook, “the bears continue to have the upper hand until or unless the [Dow] manages to trade above key resistant at August 08’s high”, both of the S&P 500 and blue-chips indexes stumble out of gate Thursday as traders got jitter ahead of Bernanke speech at the Fed symposium in Jackson Hole, Wyoming tomorrow. The end result, however, wasn’t that bad as tech stocks managed to buck the trend and finished higher with the NASDAQ-100 Index gained about 9 points or 0.46% for the day. In speaking of tech stocks, we’ve opined on the “Cubes Speculator Bulletin” that “QQQQ might be building the right hand side of the bullish inverse Head-Shoulder pattern…[an upside target] is about $49” - the NASDAQ-100 ETF (QQQQ) hit as high as $48.74 today. The newly call options set up locked in an amazing gain of +30% for the day.
As we’ve said back on August 27, “financial money might have been migrating into “selected” energy names”, energy stocks continue to buck the trend and finished higher for the day. The action had confirmed our “migrating” notion.
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As you can see, the Amex Oil Index (XOI) had successfully tested key support at the ’07 bullish breakout point. Right now, the normal expectation would be a retest of July’ high, about 1522.
Let’s take a look at the major index charts:
(Click on image to enlarge)
The Standard & Poors 500 Index (daily) chart above addresses a short-term time frame. The board market index continues to trade below the six-week falling trend-line as resistant. This is, of course, not very encouraging. However, until or unless, the bears manage to push prices to below August 16’s low, the market shouldn’t get into any serious trouble. Resistant is at August 08’s high, about 1504. Support is about 1410-1370.
(Click on image to enlarge)
The Dow Jones Industrials Average (daily) chart above addresses a short-term time frame. Similar to the S&P 500 Index, the blue-chips index is also trading below the six-week falling trend-line as resistant. Technically speaking, this is not very encouraging. Although, as noted above, the bulls should be able sleep tight as long as the index holds above key support at August 16’s low. Resistant is at August 08’s high, about 13700.
Bottom line: As far as the charts concern, trading range remains the name of the game.
Until next time, good luck.
