Editor's note: this column was originally published on Capital Essence's CEM News on October 29, 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 Tuesday October 30, 2007 .
As expected, stock drifted slightly higher Monday as investors await Wednesday's FOMC policy announcement. The Dow Jones Industrial Average climbed around 0.5% to 13870.26, while the S&P 500 index added 0.4% to 1540.98. The tech-fueled NASDAQ Composite gained 0.5% to end at 2817.44 – a new 2007 record and also its highest close in nearly seven years. Contributed to the overall optimism was a lower dollar. We've noted here a couple of time that a lower greenback (USD) is bullish for the stocks since it boosts earnings of multinational companies and makes U.S. stuffs (exports) cheaper oversea.
Let's take a look at major indices:
The S&P 500 Index (daily) chart above addresses a short-term time frame. The board market index continues to trade beneath the trendline resistant. This is not very good though until prices start to break down; it doesn't pay to argue with the market. As mentioned, a failure to take out this resistant suggests a retest of last week's low about 1490. And an advance above it, meanwhile, will increase the chance for a test of October's high about 1570.
The Dow Jones Industrial Average (daily) chart above addresses a short-term time frame. The blue-chips index seems to be stronger than its larger peer, the S&P. Technically speaking, the index is in a good position to run back to October's high. Support is at last week's low about 13400.
Bottom line: expect the market to move sideway with a slight positive bias into Wednesday's FOMC policy announcement.
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.
