Editor's note:
this column was originally published on Capital Essence's CEM News on November 26, 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 Tuesday November 27, 2007.
Stocks opened on a high note Monday amid bullish reports on the retail front that indicated consumers were in spending mode over the holiday weekend. However, it wasn't long before concerns about the financial sector took hold again and knocked the market down. By the end of the day, market gave back all of Friday's ill fated gains and then returned to negative territory for the year.
Chart 1.1: Standard & Poors 500 Index (daily).
The board market index had moved into the area of key support, around 1406. It worth noting that once this breaks, we'll be trading directly to August's low. The index has an important layer of support that runs from 1400 to 1360. Resistant is about 1450-1500.
Chart 1.2: Dow Jones Industrial (daily).
Monday' sell-off had pushed the blue-chips index slightly below key support at 12800 and hence suggests a test of Dow 12K. A closed below 12500 will confirm this. Resistant is about 13200-13500.
In summary: As a matter of fact, today's failure to rebound from a combination of oversold conditions and positive news on the retail front suggests that the tide may have been shifted in direction – instead of "buying the dip", traders are now "selling the strength". With that said the market is betting on the downside and thus one has to be concerned that the bull market that started on early 2003 might have already ended a month ago.
(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.
