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Good Morning. This is Capital Essence's "Market Outlook" (the technical analysis of financial markets) for Tuesday August 21, 2007.
As expected, equity market finished around the flat-line Monday amid a lack of follow-through momentum in the financial stocks, the Bank Index (BKX) down 1.44% for the day.
One stock that jumped up on the day was Perry Ellis (PERY). Shares of the apparel maker soared more than 6% Monday followed our "Swing Trader Bulletin" positive comment. The stock is expected to deliver a record second quarter earning report after the market close today.
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 frame. The index had bounced into the area of previous-support-now resistant, 200-day moving average. At this point, it's unknown whether this level holds or not. Although, a failure to take out this level will increase the probability for a retest of last week's low, around 1370. A close below 1430 will confirm this.
(Click on image to enlarge)
The Dow Jones Industrials Average (daily) chart above addresses a short-term frame. As expected, the blue chips index is conducting a test of resistant at the area of recent breakdown point, the bearish head-shoulder pattern's neckline. Technically speaking, a failure to take out this level suggests that recent low, around 12500, will be retested and exceeded. A close below 12980 will confirm this.
Bottom line: Monday trading action suggested a negative bias into Tuesday trading session.
