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Index Wrap


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Today's trading constituted a price range that was within yesterday's (Monday's) Highs and Lows in the Nasdaq indices, both in the Composite (COMP) and the Nasdaq 100 (NDX) - an "inside day" - with those indices down on the day by the close. In the S&P and Dow, there was only a slight expansion of the High of today relative to yesterday. By the close the blue chip segments were only slightly higher from Monday.

This relatively weak action left everything the same as far as my technical outlook per my individual chart updates on the indexes below. I don't know what might really knock the indices down sharply, but they are vulnerable to negative "shocks".

The S&P 500 Index (SPX) gained 2.6 points to 1,138.15. The Dow 30 Average (INDU) was up 33 points to 10,478.16. The Nasdaq Composite Index (COMP) fell 4.2 points to close at 2,032.53, well under its intraday high (at 2,053).

Early strength faded and many market watchers, myself included, figure that the market indices are stuck in a limited price range, especially ahead of possible new Fed activity before their next meeting in early-May.

New violence in Iraq was a reminder of how unstable the situation is there. With the political debate heating up, there is no clear or certain prospect for another GOP victory in the fall - a summer like was had in April would make it difficult for the Administration to claim success in the fight against extremist Islam.

Early strength was fed by the Conference Board's April consumer confidence index increased to 92.9 from 88.5 in March, which was an upward revision. Street expectations were for 88.7.

The CB survey found that Americans who felt positive about their present circumstances rose from 84.4 to 90.6., the highest reading since August 2002. Those who expected things to improve rose to 94.5 from 91.3. On the job front Americans who felt that jobs were harder to find dropped a bit, from 29.9 to 27.6.

Also, adding to positive sentiment in the early going was the report on existing home sales, as those numbers came in quite strong. Estimates had been for a 1% gain to 6.18 million units, but instead sales jumped to 6.48 million in March. This came on the top of Monday's record new home sales.

Since so much strength in the U.S. economy is coming from the wealth that consumers find in their homes and with this pool expanding like this, these reports have some wider stock market influences than just related to homebuilders, mortgage companies, and realtors.

Somewhat of a downer on Market sentiment later on, was talk that OPEC was considering a new higher price target, above their current $22-28 a barrel price band. Crude prices went to a new high of $37.60 a barrel in the morning. Gasoline prices are already high and with the summer driving season ahead, there is no relief in site. High gas prices do tend to weigh on consumer sentiment over time also. Not surprisingly, the oil service sector was today's big winner (again) with the OSX sector index up some 3%.

Mostly, earnings reports continue to come in strong and most companies are beating the estimates. Yet those that only manage to beat by a fraction were seeing disappointed selling coming, such as in Verizon (VZ) and DuPont (DD). Lockheed Martin (LMT) did better than expectations, with its net income coming in at 65 cents compared to consensus at 52 cents.

The general trend in earnings continues to be positive, but also seems to be, for the most part, "priced into" current price levels.

Earnings announcements due out after the close today (Tues) includes: AFLAC (AFL), Avaya (AV), Flextronic (FLEX), Maxim Integrated Products (MXIM), McDonald's (MCD), Monster Worldwide (MNST), Network Associates (NET), RF Micro Devices (RFMD), Sina.com (SINA), UTStarcom (UTSI), and ValueClick (VCLK).

In the Treasury market, the benchmark 10-year Treasury note was up a scant 3 32nds to wind up at 96 18/32. The dollar was down 0.5 percent vs. the euro at $1.19 but up 0.7 percent versus the yen, closing at 109.46 yen.


S&P 500 Index (SPX) - Daily chart:
The up and down sloping trendlines form a symmetrical triangle - The direction of the move, above or below the trendlines "resolves" the trend.

Action today was inconclusive - the High penetrated the down trendline, but then prices fell back from resistance at and just above this line. A move is still needed to above 1148-1150 to break out to the upside and head toward next resistance at 1160 at the prior top. SPX is still trading above its 21-day moving average which is a plus - stay tuned tomorrow on whether it can hold 1134.

Key is still whether SPX can hold 1120 support, then at the trendline around 1105 currently. 1100.

S&P 100 Index (OEX) - Daily chart:

Same oh, same oh -

Key near resistance is 558, then 562 in the S&P 100 (OEX). A close over 560 is needed to turn things a bit more bullish, but 562 is probably even more key. Support implied by the trendline comes in around 542. The chart picture remains, on balance, neutral to bearish.

S&P 100 Index (OEX) - Hourly chart:

Like the S&P 500 daily chart, there was this slight penetration of the hourly down trendline today, but no follow through. A close above this line tomorrow (Wed.) would be a plus for the bullish case. Momentum is down however, at least as measured by the stochastic indicator. 545 looms as key near support - an hourly close below this level is bearish, with next support at 534-535.

Dow Industrials (INDU) Daily:
10,500 on a closing basis is key resistance still. 10,300 is key near support. 10,500 is the key area to watch tomorrow. The bulls have to prove their case. If long puts, its fairly low risk to hold this position as long as there is not a move over the cluster of prior recent highs.

Nasdaq 100 (NDX) Index - Daily:
1500 is KEY resistance: a close over 1500 and an ability to hold this level on pullbacks to it, would suggest upside potential to the prior 1520 high. Doubtful the Nasdaq 100 (NDX) will clear 1520 in the near term.

1450 to 1440 is near support. If there is a move down below the centered moving average (21-day average), then I think NDX will see at least 1445.

Nasdaq 100 tracking Stock (AMEX:QQQ)- Daily:
A lot of resistance is showing at the down trendline, around 37.25-37.50 currently.

I would rather be short the Q's then long, as the risk to reward looks better. Stop out just over 37.50 (risk), with downside potential being to 34.50, maybe 34.

Nasdaq 100 tracking Stock (AMEX:QQQ)- Hourly: I continue to watch the hourly chart - as long as I don't see an hourly close over the down trendline, I'm playing this stock for another downswing. A close over 37.40 is needed to suggest much upside, say back to 38.40-38.50.

Good Trading Success!

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