Good Morning. This is Capital Essence's "Market Outlook" (the technical analysis of financial markets) for Thursday August 02, 2007.
As predicted, equity market staged a strong snapback rally Wednesday and hence, confirmed our "bullish reversal" notion – "the magnitude of Tuesday's last hour decline suggests that the market might have reached a short-term seller capitulation and hence, increased the probability for a mid-week bullish reversal" – see Market Outlook August 1, 2007.
Apparently, market volatility had returned to the Street with the Dow swung within a 258-point range Wednesday before finishing with an impressive 150 points gain. Despite the overall volatility, our Swing-Trader Bulletin continues to enjoy a nice ride. Aside from pocketing a nice profit from the Vcg Holding Corp. (PTT) and Nyse Euronext (NYX) positions, we've also enjoyed nice gains from other portfolio positions like Advent Software Inc (ADVS) – the stock had an excellent day, rose another 2.16% Thursday – a new 52-week high. Southwest Gas Corp (SWX) rose 1.38% to $31.51. Magma Design Inc (LAVA) gained 19 cents or 1.28% to $15. Starbucks Corp (SBUX) rose 53 cents or 1.99% to $27.21.
Let's take a look at the major indices charts:
The Standard & Poors 500 Index (daily) chart above addresses a short-term frame. The board market index appeared to be stabilized around the area of moving average support. However, we ain't out of the woods yet until or unless the bulls manage to take out the overhead resistant around 1490 level. Support is about 1450/40. Resistant is about 1490.
The Dow Jones Industrials Average (daily) chart above addresses a short-term frame. The blue-chips index posted an impressive 150 points gain for the day amid the last hour aggressive buying spree. Needless to repeat, this action is bullish. However, we ain't out of the woods yet until or unless the bulls manage to take out the overhead resistant around the 13,550 level.
Bottom line: more likely than not, Wednesday's bullish reversal is the beginning of a snap back rally that will last for a couple of days. An upside follow-through tomorrow will confirm this.
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.
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