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Good Morning. This is Capital Essence’s “Market Outlook†(the technical analysis of financial markets) for Tuesday August 07, 2007.
As we’ve predicted right here in the previous Market Outlook “the market is pretty much oversold and we, therefore, think prices could move sideways for sometimes or even experience a little bounce†â€" see “Market is oversold but don’t count on it†August 6, 2007; equity market rebound Monday with all 10 S&P sectors finished noticeably higher.
Contributed to the positive tone was a bullish turn around in the financial stocks.
As you can see, the Bank Index (BKX) turned in its best performance in nearly five years, up more than 5% Monday and hence confirmed our “oversold bounce†notion. Resistant is about 109-112. Support is about 101.
It worth notice that crude oil prices turned for the worse Monday, plunged 4.5% to $72.06/bbl and closed near session low. Technically speaking, the long-term trend remains positive and this decline should be taken as another buying opportunity. Short-term support is about 68. Resistant is about $78.70.
Let’s take a look at the major index charts:
The Standard & Poors 500 Index (daily) chart above addresses a short-term frame. As expected, the board market index kicked off a nice oversold relieve rally Monday. Apparently, the question that everyone has in mind is “how far can it go from here?†At this stage, all we can say is: watch out for the sneaky bear around the 1490 level. Short-term support is about 1427. Short-term resistant is about 1490.
The Dow Jones Industrials Average (daily) chart above addresses a short-term frame. Similar to the S&P 500, the blue-chips index also rebound nicely Monday followed a retest of support at last Wednesday low around the 13150 level. Technically speaking, the bears still have the benefit of the doubts unless the index manages to take out resistant at the 50-day moving average. Short-term support is about 13150. Short-term resistant is about 13560.
Bottom line: unless there is a headline that everyone recognizes as extreme bullish, the rally is likely to lose steam around the S&P 1490 level.
Until next time, good luck.
