Markets Overview

By: Angelo Campione | Sun, Jul 27, 2008
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7/27/2008 9:17:36 PM

Index Reviews for July 25, 2008

Here's an overall review of the various major markets. This analysis has a medium term outlook. Note, the figures in brackets were the last reported figures on June 27, for comparison purposes.

Index Close Support Resistance Primary Trend 200 DMA
Financials 20.87 (20.57) 19 24.00 Down 25.95

The Financials have continued to be thumped into mid July but now are showing signs of a rebound.

Index Close Support Resistance Primary Trend 200 DMA
S&P 500 1258 (1278) 1240 1290 Down 1377

The S&P has dropped down to 1200 in mid July, almost 17% from its peak on May 19! It's now looking like a retracement is underway. If the 1290 resistance level can be surpassed, 1310 - 1320 is the next resistance levels. On the other hand, if support breaks at 1240, 1200 is the next critical level of support.

Index Close Support Resistance Primary Trend 200 DMA
Nasdaq 100 1846 (1856) 1800 1950 Side 1922

The Nasdaq has essentially been going sideways and is tracing out a large symmetrical triangle. This means that we're in a period of indecision and to break out of this indecision, the Nas will either need to go above 1950 or below 1750. This may not happen until the end of the year or early next year.

Index Close Support Resistance Primary Trend 200 DMA
Dow Jones 11370 (11346) 11250 11700 Down 12534

The Dow, like the S&P has fallen around 17% and looks like it's on the come back trail. The best that can be hoped for at this stage is the 200 DMA at around 12,500.

Index Close Support Resistance Primary Trend 200 DMA
Russell 2000 710 (698) 680 740 Side 723

The Russell has rebound strongly, adding around 10% in the last 2 weeks, however it seems to be caught in a sideways pattern since the start of the year that runs between 650 and 740. A break above 740 would be bullish and below 650, bearish.

Index Close Support Resistance Primary Trend 200 DMA
Volatility (VIX) 22.91 (23.44) 20.00 27.50 Side 23.46

The VIX has essentially been moving sideways in the medium term and it too seems to be indicating a level of indecision. Below 20 will be positive for stocks and above 27.50, bearish.

Index Close Support Resistance Primary Trend 200 DMA
US Dollar 72.85 (72.29) 71.00 74.00 Down 74.21

The dollar continues to move in a sideways pattern that has now lasted for 4 months between 71 and 74. If we can close above 74.3 that will be the first positive sign for the dollar, and a close below 71 will be a negative sign.

Index Close Support Resistance Primary Trend 200 DMA
Gold 937 (931) 850 950 Up 891

Gold, like the dollar is still essentially sideways, it was looking more positive when it broke above $950, but it didn't last long before it fell back under.

Index Close Support Resistance Primary Trend 200 DMA
Crude Oil 123 (140) 120 145 Up 109

Finally oil had a break from its parabolic run after getting close to the $150 mark. It may go to $110 and then begin to head although a more likely scenario is that it finds support at $120, rises back to around $135 and then drops to $110 - $100. Markets love the zig zag effect.

Index Close Support Resistance Primary Trend 200 DMA
CRB 412 (464) 400 430 Up 396

The CRB index, similar to oil, has fallen from grace. We're likely to see some rebound in commodities soon.

Index Close Support Resistance Primary Trend 200 DMA
Bonds (TLT) 90.14 (92.32) 89.00 94.00 Side 92.38

Bonds also seem to be going through a period of indecision, sideways action between 89 and 94 is likely to continue.

Index Close
Put/Call Ratio 0.83 (1.13)

Looking at history, when the ratio of put options to call options is around 0.70 it indicates a short-term top, whereas a figure of around 1.50 indicates a short term bottom. The current figure of 0.83 indicates that possibly some comfort is starting to creep in, so be wary about rises in the market short term (note, this ratio can change very quickly so this mainly useful when you see an extreme in the ratio).

SUMMARY

We have the major markets rebounding from extreme oversold conditions but several other markets are indicating indecision ahead.

Financials are likely to continue to be volatile which will impact stocks. Commodities are approaching support levels and so could rebound shortly. Dollar and gold are still indecisive together with bonds.

The conclusion is that stocks are showing positive signs and things are looking up for the month ahead. Although it's not clear sailing ahead after that, it's likely to continue to be a bumpy ride.

 


 

Angelo Campione

Author: Angelo Campione

Angelo Campione
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