Editor's note: this column was originally published on Capital Essence's CEM News on October 23, 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 Wednesday October 24, 2007 .
Stocks closed higher Tuesday amid a batch of good earnings news from American Express (AXP), AT&T (T), DuPont (DD), UPS (UPS), Burlington Northern (BNI) and Apple (AAPL). Speaking of Apple, the iPod maker's upbeat earning report had fueled a board buying interest that sent the NASDAQ 100 Index to a new multi-year high.
Today's bullish breakout positioned the tech rich index to test the 2001 high about 2770. As a matter of fact, Tuesday trading action was very consistent to what we've predicted in our Monday evening "Cubes Speculator Bulletin": "there is a high probability for a retest of the $54 level". Despite the pocket of weakness which contributed to a mid-morning sell-off, the NASDAQ 100 Index ETF (QQQQ) maintained a bullish bias as the dip was greeted by an even more aggressive wave of buying interest that pushed the stock to $54.18 – the best closing level since 2001. The newly QQQQ call option setup gained as much as +68% in just 2 days.
The S&P 500 Index (daily) chart above addresses a short-term time frame. As expected, the board market index moved higher Tuesday followed a successful test of support at the 50-day moving average. Expect a test of short-term resistant about 1530 in the upcoming days. As mentioned, a clear breakout above this level indicates a retest of the bearish "key reversal point" about 1560.
The Dow Jones Industrial Average (daily) chart above addresses a short-term time frame. Similar to its peers, the blue-chips index also closed higher today after the dip [into the 50-day moving average] was greeted by an aggressive wave of buying interest. The index is well position to test the short-term resistant at last Friday's bearish breakdown point around 13800. Support is about 13400.
In summary, the overall picture remains bullish as long as the market holds above last Friday's low.
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.
