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Good Morning. This is Capital Essence's "Market Outlook" (the technical analysis of financial markets) for Wednesday August 08, 2007.
As we've predicted right here in the previous Market Outlook "
the rally is likely to lose steam around the S&P 1490 level" – see "
Watch out for the sneaky bears at the S&P1490" August 7, 2007; equity market added on previous gain Tuesday with the S&P hit as high as 1489 before sellers stepped in and pushed the tape lower. Although, the end results wasn't that bad with a majority of major indices shown an average gain of 0.5% for the day.
Once again, financials strong performance is the key behind today advance.
Apparently, the Bank Index (BKX) is run for a test of the overhead resistant that runs from 109 to 112. At this moment, it's impossible to know whether the index can take this level out or not. Although, bear in mind that the bears are going to raid the Street should the financial stocks make a naughty U-turn from here. Once again, "as goes the bank, so goes the tape." Resistant is about 109-112. Support is about 101.
Despite the overall volatility, the
Swing-Trader Portfolio continues to do well.
Advent Software Inc (ADVS) jumped more than 5% to another new high today. The position has an amazing unrealized gain about 13%.
Cepheid (CPHD) rose 58 cents or almost 4% to $15.56.
Research in Motion Ltd (RIMM) up about 4 points to $222.22.
Accuray Inc (ARAY) added on to previous gain, up 1.61% to finish at $20.18.
Starbucks Corp (SBUX) up 0.86% to $27.12 – it worth notice that SBUX had formed a bullish continuation pattern on the daily chart.
In addition, the short positions are also doing extremely well with
Gardner Denver Inc (GDI) down more than 2% to $39.66…
Let's take a look at the major index charts:
The Standard & Poors 500 Index (daily) chart above addresses a short-term frame. As predicted, the board market index tested the 1490 level today. Any SPY call option traded could have made at least 50% intraday. General speaking, the bears continue to have the benefit of the doubts until or unless prices breakout above the 1490 level. Short-term support is about 1427. Short-term resistant is about 1490.
The Dow Jones Industrials Average (daily) chart above addresses a short-term frame. As expected, the blue-chips index tested resistant at the 50-day moving average today. Although the end result suggested that the bears still have the upper hand. A decline to below today low, about 13347, will confirm this. Short-term support is about 13150. Short-term resistant is about 13600.
Bottom line: needless to say, the oversold bounce that took place over the last two days was, definitely, refreshing. However, with a majority of major indices approaching key overhead resistant, it's important to keep an eye on the tape. With that said, the market is at a cross road – if the rally has some legs, then we'll see further strength near term and on the other hand, if this rally is nothing more than a dead cat bounce, then the decline could resume in a day or two.
Until next time, good luck.
