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Good Morning. This is Capital Essence's "Market Outlook" (the technical analysis of financial markets) for Thursday August 09, 2007.
We've opined right here in the previous Market Outlook that "
the market is at a cross road – if the rally has some legs, then we'll see further strength near term" – see "
Cross Road" August 8, 2007; equity market added on to previous gain Wednesday with the NASDAQ Composite Index rose more than 50 points or 2% to finish at 2612. This is impressive. As a matter of fact, today strong performance was very consistent with what we've predicted in our
"Cubes Speculator Bulletin" a couple days ago – "
expect a test of the $49 level as soon as Wednesday. We'll take some money off the table around this area." The NASDAQ-100 ETF (QQQQ) hit as high as $49.06 today. Any call option traded could have made more than a 100% today.
Overall, it was a very strong day on the Street and so our "
Swing-Trader Bulletin" with
Cepheid (
CPHD) soared almost 15% to a new high. The position has an amazing unrealized gain of almost 20% in just 3 days.
Advent Software Inc (
ADVS) jumped almost 9% to a new high. We've took a partial profit of 20% today when the stock hit our first target @ $44.
Accuray Inc (
ARAY) added on to previous gain, up 2.63% to finish at $20.71. This position has an unrealized gain of almost 10% in just a week.
Research in Motion Ltd (
RIMM) gained almost 4 points to $226.01.
Starbucks Corp (
SBUX) also gained more than 2% to finish at $27.72 followed our positive comment on the stock.
Despite what was the S&P 500's best three day performance since March 2003, our short positions are doing extremely well with
Service Corp (
SCI) down about 3% to $11.59.
Gardner Denver Inc (
GDI) dropped 4.50% to $37.80. The position has an unrealized gain of almost 10% in just 2 days. Aside from the 20% gain from
ADVS, we've also took home a nice 10% profit from the
Cash America Int' (
CSH) short position.
Let's take a look at the major indices charts:
The Standard & Poors 500 Index (daily) chart above addresses a short-term frame. As expected, the board market index broke out above the 1490 level today amid another round of short covering rally from the financial sector – its most influence sector. General speaking, Wednesday advance was more than just refreshing – it felt really good! However, we ain't out of the wood yet as long as the index trades below the 50-day moving average. Short-term support is about 1460. Bear in mind that a decline to below this level suggests a retest of last week's low. Short-term resistant is about 1510.
The Dow Jones Industrials Average (daily) chart above addresses a short-term frame. The blue-chips index took out the resistant at the area of 50-day moving average. This is bullish. However, the index appeared to be oversold on a short-term basis. Expect small correction or consolidation in the upcoming days. Short-term support is about 13150. Short-term resistant is about 13600.
Bottom line: the bulls had, definitely, regained some momentum after Wednesday advance. However, as noted above, they are going to have a difficult time around the S&P 50-day moving average area, which is about 15 points from here.
Until next time, good luck.
