Editor's note:
this column was originally published on Capital Essence's CEM News on November 08, 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 Friday November 09, 2007.
Street endured a roller coaster session Thursday with the Dow and S&P dropping as much as 220 and 25 points respectively in the morning session.
Though, as we've predicted in the
afternoon "Cubes Speculator Bulletin" memo: "the Q's is printing a small double bottom as I type. This means the stock is due for a short-covering bounce", the bulls kicked in an impressive late day rally that propelled the major indices to around the zero line and hence, pared the majority of their intraday losses. Any calls options traded could have earned about 20% intraday. It worth notice that, the financials' nice rally in the last hour of trading had helped to stop the "bleeding".
As you can see, today trading action, as a matter of fact, was pretty consistent with what we've offered in the
previous Market Outlook: "
with the banks reaching the level that precedes a technical rebound, this is a good time for the bears to consider taking some money off the table".
The Bank Index (BKX) gained +1.29% for the day.
The index has a layer of short-term resistant that runs from 98 to 100.
Let's take a look at the major indices:
The S&P 500 Index (daily) chart above addresses a short-term time frame. As expected, the index had to move into the 1450 zone after the decline into the area of 200-day moving had failed to attract buyers. Today's long leg doji looks pretty similar to that of the August's 16. The implication is the same – it's bullish. Though whether it has the same power to fuel a run back to the October's high or not is remained to be seen.
The Dow Jones Industrial Average (daily) chart above addresses a short-term time frame. Similar to the S&P, the blue chip index had also printed a bullish long leg doji at the area of support. This is bullish. This suggests a test of the 13500 level in the upcoming days. A positive close tomorrow will confirm this.
Bottom line: as expected, the market rebound nicely from the oversold condition. The action is definitely refreshing. It suggests a positive bias for Friday's trading session.
(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
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