Good Morning. This is Capital Essence's "Market Outlook" (the technical analysis of financial markets) for Friday August 03, 2007.
As we've predicted right here in the previous Market Outlook "more likely than not, Wednesday's bullish reversal is the beginning of a snap back rally that will last for a couple of days" – see "Snapback Rally" August 2, 2007 – equity added on to previous gains Thursday with the Dow rose 100.96 points or 0.76% to finished at 13463.33. The S&P 500 Index gained 6.39 points or 0.44% to 1472.20.
For a second day in a row, stocks stayed relatively calmed until the late surge took the major indices higher. Overall, it was a good day on the Street and so the Swing-Trader Bulletin. Advent Software Inc (ADVS) printed another new 52-week high today, gained about 2% to $39.63. The stock gained almost 10% since profiled 3 days ago. Accuray Inc (ARAY) gained 41 cents or 2.15% to $19.52. The new short position, Cash America Int' (CSH) also moved well on the expected direction, down 30 cents or 0.85% to $35.15.
On the downside, Vcg Holding Corp. (PTT) lost almost 4% on high volume. Glad that we've took a most of the money off the table yesterday. However, unless the stock takes out the July's low, this pullback could be taken as a good buying opportunity for aggressive traders.
Let's take a look at the major indices charts:
(Click on the image to enlarge)
The Standard & Poors 500 Index (daily) chart above addresses a short-term frame. As predicted, the board market index moved higher Thursday. As mentioned, keep the 1490 level on your trading radar for a sustain breakout above it, will increase the probability for a retest of the June's high. Support is about 1450/40. Resistant is about 1490.
(Click on the image to enlarge)
The Dow Jones Industrials Average (daily) chart above addresses a short-term frame. The blue-chips index seemed to move well on the expected direction – it's getting very close to the overhead resistant at the 50-day moving average, about 13550. Bear in mind that a failure to take out this level will increase the probability for a test of the February's high about 12,800. Support is about 13132. Resistant is about 13550.
Bottom line: we're expecting the S&P 500 to conduct a first test of resistant at the 1490 level sooner rather than later. At this stage, it's impossible to know whether the index can successfully take out this level or not. Although, bear in mind that a failure to do so will put the bears into the driver side of the market.
Until next time, good luck.
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.
