Stock Market Outlook for July 23, 2010
Upcoming Events for Today:
- European Bank Stress Tests are expected to be released around 1:00pm EST
The Markets
| Market | Close | % Change | Expected ST Low | Expected ST High |
| Dow Jones Industrial Average (^DJI) | 10,322.30 | 1.99% | 9,844.94 | 10,399.48 |
| Dow Jones Transportation Average (^DJT) | 4,303.25 | 3.87% | 4,018.06 | 4,402.81 |
| Dow Jones Utility Average (^DJU) | 386.77 | 1.58% | 360.46 | 382.79 |
| S&P 500 (^GSPC) | 1,093.67 | 2.25% | 1,039.07 | 1,109.51 |
| S&P/TSE Composite (^GSPTSE) | 11,667.76 | 1.34% | 11,285.00 | 11,894.39 |
| NASDAQ Composite (^IXIC) | 2,245.89 | 2.68% | 2,123.83 | 2,291.47 |
| Austrian Traded Index (^ATX) | 2,413.19 | 3.17% | 2,261.81 | 2,426.38 |
| French CAC 40 (^FCHI) | 3,600.57 | 3.05% | 3,397.60 | 3,684.28 |
| German DAX (^GDAXI) | 6,142.15 | 2.53% | 5,909.68 | 6,229.49 |
| UK FTSE 100 (^FTSE) | 5,313.80 | 1.90% | 4,903.68 | 5,260.68 |
| Swiss Market Index (^SSMI) | 6,194.20 | 1.00% | 6,039.89 | 6,480.71 |
| Brazilian IBOVESPA (^BVSP) | 65,748.00 | 1.97% | 61,652.77 | 64,912.61 |
| Mexico’s IPC (^MXX) | 32,720.76 | 1.91% | 31,416.41 | 32,738.87 |
| Amsterdam Exchange Index (^AEX) | 335.20 | 2.71% | 313.05 | 336.79 |
| New Zealand NZX 50 INDEX GROSS (^NZ50) | 2,981.36 | -0.73% | 2,954.49 | 3,056.38 |
| China HANG SENG INDEX (^HSI) | 20,589.70 | 0.50% | 19,875.80 | 20,756.09 |
| Korea KOSPI Composite Index (^KS11) | 1,735.53 | -0.76% | 1,672.41 | 1,746.82 |
| Tokyo NIKKEI 225 (^N225) | 9,220.88 | -0.62% | 9,246.76 | 10,040.82 |
North American markets rallied to significant gains on Thursday as favorable earnings reports from UPS, Caterpillar, AT&T and 3M added optimism to the market. Wednesday saw investors re-adopt the gloom and doom sentiment as Bernanke’s comments on the “unusually uncertain” economy forced investors to push the sell button. But as the market opened on Thursday, gloom and doom was replaced with enthusiasm and boom as better than expected earnings reports, leading indicators and existing home sales put to rest some of the overly negative forecasts, leading the market to rally despite some mixed news surrounding jobless claims and an expansion of the SEC probe into Goldman Sachs.
The favorable reports from Caterpillar and UPS emphasizes the mid-recovery position we’re currently at in the sector rotation model. The model indicates that industrials perform well during this stage in the recovery with the Energy sector to follow as a market mover in the near future. Dow components Chevron and Exxon Mobil report next week and investors will surely be seeking further clues of recovery prospects.
Despite the plentiful activity over the past few days, the market has found itself back in overbought territory. Stochastics revealed this indication following Thursday’s bullish activity, however, optimism amongst technicals ensues with favorable momentum and bullish indications noticed across key indexes. Friday will most likely see a retest of last week’s highs, which are now viewed as the point of resistance the market will have to overcome to make a significant move to the upside.
Gold and Gold stocks continue to show signs of potential entry points into the seasonal play approaching at the end of this month. Barrick and Goldcorp report next week, which usually marks the start of the seasonal trend that ranges through October. Watch for further technical signals to confirm the move.
Market sentiment looking at options volumes has once again shifted to the bullish side of the scale after providing bearish indications on Wednesday when the number of puts trading hands exceeded that of calls. Current put/call ratio sits at 0.82. The 10-day moving average continues to decline as stability once again re-emerges amongst trading strategies.
Sectors that Moved the Market
| Sector | % Price Change | % Volume Change |
| Energy Sector (XLE) | 2.21% | 2.12% |
| Basic Materials Sector (XLB) | 2.15% | 73.32% |
| Financial Sector (XLF) | 2.92% | -18.02% |
| Health Care Sector (XLV) | 0.64% | -26.79% |
| Consumer Discretionary Sector (XLY) | 3.01% | 5.60% |
| Industrials Sector (XLI) | 3.08% | -22.88% |
| Technology Sector (XLK) | 2.70% | -29.64% |
| Utilities Sector (XLU) | 1.60% | -16.40% |
| Consumer Staples Sector (XLP) | 1.13% | -38.21% |
Industrial stocks were the market mover on Thursday, lead by stellar results from 3M, UPS and Caterpillar. Across the board it was obvious that the risk play was back on with Discretionary and Financial stocks both gaining around 3%.
S&P 500
Chart Courtesy of StockCharts.com
| Support 2 | Support 1 | Pivot Point | Resistance 1 | Resistance 2 |
| 1062.41 | 1078.04 | 1087.77 | 1103.40 | 1113.13 |
Total Returns
Yesterday: 2.25% – Trailing 5 days: –0.26% – Trailing 30 days: –0.15%
Averages for current day based on past 20 years of data
- Current Day: –0.47% with 46.67% of sessions gaining
- Next 7 days: 0.26% with 52.00% of sessions gaining (Max return: 1.23% by July 27 on Average)
- Next 30 days: 0.63% with 53.73% of sessions gaining (Max return: 2.76% by August 8 on Average)
TSE Composite
Chart Courtesy of StockCharts.com
| Support 2 | Support 1 | Pivot Point | Resistance 1 | Resistance 2 |
| 11461.78 | 11564.77 | 11616.36 | 11719.35 | 11770.94 |
Total Returns
Yesterday: 1.34% – Trailing 5 days: –0.63% – Trailing 30 days: –1.10%
Averages for current day based on past 10 years of data
- Current Day: –0.35% with 28.57% of sessions gaining
- Next 7 days: –0.49% with 52.00% of sessions gaining (Max return: 1.17% by July 26 on Average)
- Next 30 days: 0.98% with 52.86% of sessions gaining (Max return: 2.92% by August 9 on Average)
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