Trading range is the name of the game
Editor’s note: this column was originally published on Capital Essence’s CEM News on September 6, 2007. It’s being republished as a bonus for the loyal readers. For more information about subscribing to CEM News, please click here.
Good Morning. This is Capital Essence’s “Market Outlook” (the technical analysis of financial markets) for Friday September 07, 2007.
As discussed, there were a lot of “stuffs” going on in this market though they’ve all seemed to be crossed look, at least for today. For instant, the bullish retail news from names like Wal-Mart, Target, Saks…etc didn’t spark the expected rally. And so the bearish news from Venezuela and the lethargic financial stocks had also failed to push the tape down. I guess, like the rest of us, Mr. Market is also …confused! Overall, it was a “nothing-to-write-home” day.
Gold bug (HUI) was the only shiny spot Thursday, jumped more than 6% for the day amid a rumor that “China is buying gold with its reserves.”
The market interpreted the rumor [or news or whatever you call it] as extremely bullish. It worth notice that gold bugs is now set to challenge the key resistant at the upper border of the two years old coil, about $370. At this moment it’s impossible to know whether the gold bugs can successfully take out this level or not. Although, bear in mind that a sustain advance to above this level will increase the probability for a test of the ’06 high about $387.
Let’s take a look at the major index charts:
The Standard & Poors 500 Index (daily) chart above addresses a short-term time frame. The index traced out a nothing bar on the daily chart. Although, as mentioned, the bearish bias remains intact as long as the index trades below the 1500 level. The index has a layer of support that runs from 1430 to 1370. Short-term resistant is about 1500.
The Dow Jones Industrials Average (daily) chart above addresses a short-term time frame. Not much had been changed since last update. The blue-chips index continues to drag sideway beneath resistant at the 50-day moving average. The action is totally bearish. As mentioned, the bullish bias won’t kick in until the bulls manage to push prices to above key resistant at August 8’s high. Short-term support is at the 200-day moving average, about 12900. The index has a layer of resistant that runs from 13500 to 13700.
Bottom line: as far as the charts concern, trading range is the name of the game, at least for Friday. With that said, until or unless there is a headline that everyone recognizes as extreme bullish or bearish, expect the tape to drag sideway from here into the weekend.
Until next time, good luck.
(By: Michelle Mai for Capital Essence)
Note: Michelle Mai writes technical analysis for Capital Essence and is the editor of Capital Essence’s “Market Outlook” newsletter. To receive the daily edition, please subscribe. It’s now available at a monthly rate.
