A Few Thoughts Before the Open: The overall market staged a strong rally yesterday that saw the broad market move in lockstep with the major market indices. The Dow Jones Industrial Average rose 186 points to close at 11,433.18 This took the Dow Jones Industrial Average to the upper end of its trading range. However despite the nearly 500 point move higher by the Dow it is still below its 40 day moving average and has not broken through upside resistance which I see being at 11,493.57 on a closing basis. Until the Dow Jones Industrial Average closes above 11,493.57 (which it could do today), I still consider the Dow to be in a sideways trading pattern with the upper end at 11,493.57 and the lower end at 10,719.94
Considering yesterday’s strong move to the upside I thought now would be a good time to update our expectations for the various sector indices we track, which I have done so below. Despite yesterday’s move higher, I really did not see anything that broke out to the upside. The Bottom Line: Unless we see some follow through today, we still look to be in a sideways trading pattern.
In looking at the various indices I track, I have the following comments.
Dow Jones Industrial Average: The Dow Jones Industrials closed at 11,433.18 I currently see upside resistance on the Dow at 11,493.57 and downside support at 10,719.94 on a closing basis. I think the Dow Jones Industrial Average is in a sideways trading pattern with the upper end at 11,433.18 and the lower end at 10,719.94 Until the Dow closes above or below this range I think it is basically tracking sideways.
S&P 500 ‘SPX’: The S&P 500 closed at 1,209.11 I see upside resistance on the S&P 500 at 1,218.89 and downside support at 1,127.79 on a closing basis.
NASDAQ 100 Index ‘NDX’: The NASDAQ 100 closed at 2,286.56 I continue to see downside support on the NDX at 2,100 and upside resistance at 2,292.34.
The Dow Jones Transportation Average: The Dow Transports closed at 4,664.84 I see upside resistance on the Dow Transports at 4,683.96 and downside support level at 4,320.05 on a closing basis.
M.S. Commodities Related Equity Index ‘CRX’: The ‘CRX’ closed at 892.32. I see upside resistance on the ‘CRX’ at 924.89 and downside support at 847.10
KBW Banking Index ‘BKW: The ‘BKW’ closed at 38.85. I see upside resistance on the ‘BKW’ at 41.42 and downside support at approximately 35.10 on a closing basis.
S&P Banking Index ‘BIX’: The ‘BIX’ closed 119.39. I see upside resistance on the ‘BIX’ at 120.71 and downside support at 100.96 on a closing basis.
Amex Broker/Dealer Index ‘XBD’: The ‘XBD’ closed at 89.14 I see upside resistance at 92.97 and downside support at 80.87 on a closing basis. I am expecting the ‘XBD” to continue to move lower and test 80.87 on a closing basis.
S&P Insurance Index ‘IUX’: The ‘IUX’ closed at 160.23 I see upside resistance on the ‘IUX’ at 175.13 and downside support at 143.80 on a closing basis. I am currently expecting the ‘IUX’ to continue to move lower and test 143.80 on a closing basis.
Amex Gold & Silver Index: The Amex Gold & Silver Index ‘XAU’ closed at 215.18 I see upside resistance on the ‘XAU’ at 228.95 and downside support at 208.47 I have been looking at increasing volatility this index and as a result have widened my trading range by adjusting the downside support level down to 208.47. As a result I basically see this index tracking sideways between 228.95 on the upper end and 208.47 on the lower end.
Amex Oil & Gas Index: The Amex Oil & Gas Index closed at 1,151.76 I currently see upside resistance on the ‘XOI’ at 1,1469.65 on a closing basis and downside support at 1,050.78. The ‘XOI’ appears to be in a sideways trading pattern. I have widened our trading band to 1,151.76 on the high end and 1,050.78 on the lower end.
M.S. Cyclicals Index: The M.S. Cyclicals Index ‘CYC’ closed yesterday at 865.95 I currently see upside resistance on the ‘CYC’ at 868.97 and downside support at 789.46 on a closing basis.
M.S. Consumer Index: The M.S. Consumer Index ‘CMR’ closed at 718.12 I currently see upside resistance on the ‘CMR’ at 725.78. and downside support at 691.44 on a closing basis.