Safehaven | Markets Overview | Printer Friendly Version

July 27, 2008

Markets Overview
by Angelo Campione

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.

Regards,

Angelo Campione

About The Advantage Report Trader Alert:

The Advantage Report is a timing service that allows you to maximize profit in both bullish and bearish market, we have a proprietary system that issues buy or sell signals based on several algorithms.

The signals we have are:

BUY - This means go long in your desired investment vehicle.
SELL - This means go short in your desired investment vehicle.
PRELIMINARY BUY or SELL - This means be alert to a potential change of signal and be ready to take action shortly but DO NOT take action yet.
STOP - This means close your positions and go to cash

To Learn more about us: Click Here

Not a subscriber yet? Want to be? Click here and sign up for a no cost trial. Sign up for our TRADE TUTOR weekly newsletter at no cost to get a trading education from Pro Traders.

Important Disclosure:

Futures, Options, Mutual Fund, and Equity trading have large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in these markets. Don't trade with money you can't afford to lose. This is neither a solicitation nor an offer to buy/sell Futures, Options, Mutual Funds or Equities. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this Web site. The past performance of any trading system or methodology is not necessarily indicative of future results.

Performance results are hypothetical. Hypothetical or simulated performance results have certain inherent limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not actually been executed, the results may have under- or over-compensated for the impact, if any, of certain market factors, such as a lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown.

Investment Research Group and all individuals affiliated with Investment Research Group assume no responsibilities for your trading and investment results.

Investment Research Group (IRG), as a publisher of a financial newsletter of general and regular circulation, cannot tender individual investment advice. Only a registered broker or investment adviser may advise you individually on the suitability and performance of your portfolio or specific investments.

In making any investment decision, you will rely solely on your own review and examination of the fact and records relating to such investments. Past performance of our recommendations is not an indication of future performance. The publisher shall have no liability of whatever nature in respect of any claims, damages, loss, or expense arising out of or in connection with the reliance by you on the contents of our Web site, any promotion, published material, alert, or update.

There is a very high degree of risk involved in trading. Past results are not indictive of future returns. Stock Barometer and all individuals affiliated with Stock Barometer assume no responsibility for your trading or investment results.