Editor's note: this column was originally published on Capital Essence's CEM News on October 31, 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 01, 2007 .
As expected, the Federal Open Market Committee did their thing again on Wednesday, cut the fed funds and discount rates by 25 basis points each to 4.50 percent and 5.00 percent, respectively, and hence, driving the market higher. The Dow Jones industrial average added 137 points or 1 percent, while the S&P 500 index added 1.2 percent. The NASDAQ composite added 1.5 percent and ended at a fresh 2007 high. Gold also closed at new high amid the bullish FOMC announcement.
Technically speaking, the bullish scenario remains intact as long as the yellow metal holds above the three-month rising trendline. Just so that you know, gold has gained about 100 points or +14.39% since our September 7 bullish comment.
Let's take a look at the major indices:
The S&P 500 Index (daily) chart above addresses a short-term time frame. The index took out the short-term resistant at 1545 today on good volume. This is bullish. Technically speaking, the bullish bias remains intact as long as the index holds above the two-week rising trendline. Support is about 1500. Resistant is about 1570.
The Dow Jones Industrial Average (daily) chart above addresses a short-term time frame. Technically speaking, today high range close had put the blue chip index in a good position for a test of October's high. An upside follow-through tomorrow will confirm this. Support is about 13700. Resistant is about 14200.
Bottom line: Wednesday's trading action suggested that the path with least resistant is to the upside.
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.
