Editor’s Note: The following article was written by Michelle Mai of Capital Essence. It has been reproduced with permission for the benefit of the S.M.R community.
Good Morning. This is Capital Essence’s “Market Outlook” (the technical analysis of financial markets) for Tuesday July 24, 2007.
We’ve opined in our previous Market Outlook that “unless, the bears manage to take out [the S&P] 1506, the path with least resistant is still to the upside” – see “Overbought” July 23, 2007; equity market closed higher Monday.
Stock of the day: shares of Amr Corporation (AMR), profiled as a long holding in our “Swing Trader Bulletin” on July 17, jumped almost 8% Monday after Goldman Sachs raised the 2007 estimates to $2.75 from $2.35 following second quarter results. Target price also pushed to $26 from $22.
Let’s take a look at the major index charts:
The Standard & Poors 500 Index (daily) chart above addresses a short-term frame. The board market index continued to trade within last Friday’s trading range. So far, so good. Short-term support is about 1530. Short-term resistant is about 1555.
The Dow Jones Industrial Average (daily) chart above addresses a short-term frame. Similar to the S&P 500 Index, the Dow also traded within last Friday’s wide trading range. Apparently, the “basing” scenario that we’ve discussed in the previous Market Outlook is started right here, right now. Short-term support is about 13800. Short-term resistant is about 14020.
Bottom line: despite the green tape, Monday’s trading action suggested a flat tape with some sort of negative bias into Tuesday session. A decline to below last Friday low will confirm this. Although, as mentioned, we’d buy this dip as long as the majority of major indices sustain support at the June’s low.
Until next time, good luck.
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.
