Editor's note: this column was originally published on Capital Essence's CEM News on November 14, 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 Thursday November 15, 2007 .
As goes the banks, so goes the tape. Stocks closed lower Wednesday as traders locked in profits around the BKX's 100 (see chart 1.1). As a matter of fact, today's trading action was pretty consistent with what we've offered in the previous "Cubes Speculator Bulletin": "be aware of the "back & forth" [or weak bulls shake out, so to call] in the upcoming days". The Nasdaq 100 ETF (QQQQ) gave back more than 1% today.
Chart 1.1: Bank Index.
The index retreated after the first test of resistant around the 100 level was met by sellers. As mentioned, a failure to take out this level is very bearish and a retest of last week's low is, therefore, inevitable. Short-term support is at last week's low, about 90.
Chart 1.2: Standard & Poors 500.
The board market index closed lower after the first test of resistant at the 1490 level was met by sellers. This is not very good. Short-term support is about 1400. Resistant is about 1490-1500.
Chart 1.3: Dow Jones Industrial Average.
The blue-chips index is still traded below October's low, about 13500, as resistant. This is bearish. At this juncture, only an advance to above this level can turn the medium-term trend up and argue for a test of October's high. Resistant is about 13500. Support is about 12975.
In summary: While being able hold on a majority of Tuesday's sizeable gain was a positive sign, a failure to take out the S&P 1490 restrained new buying activities. Like the rest of us, market is searching for direction.
(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.
