Stock Market Outlook for September 10, 2010
Upcoming Events for Today:
- Wholesale Inventories for July will be released at 10:00am. Market expects an increase of 0.4% versus an increase of 0.1% previous.
The Markets
| Market | Close | % Change | Expected ST Low | Expected ST High |
| Dow Jones Industrial Average (^DJI) | 10,415.24 | 0.27% | 10,069.38 | 10,633.62 |
| Dow Jones Transportation Average (^DJT) | 4,388.07 | -0.28% | 4,120.60 | 4,470.66 |
| Dow Jones Utility Average (^DJU) | 398.60 | 0.70% | 379.39 | 396.82 |
| S&P 500 (^GSPC) | 1,104.18 | 0.48% | 1,055.45 | 1,120.98 |
| S&P/TSE Composite (^GSPTSE) | 12,033.53 | -0.07% | 11,582.12 | 12,052.47 |
| NASDAQ Composite (^IXIC) | 2,236.20 | 0.33% | 2,134.24 | 2,286.26 |
| Austrian Traded Index (^ATX) | 2,501.43 | 0.89% | 2,406.26 | 2,527.24 |
| French CAC 40 (^FCHI) | 3,722.15 | 1.22% | 3,488.42 | 3,746.66 |
| German DAX (^GDAXI) | 6,221.52 | 0.93% | 5,935.12 | 6,303.83 |
| UK FTSE 100 (^FTSE) | 5,494.20 | 1.19% | 5,176.69 | 5,418.70 |
| Swiss Market Index (^SSMI) | 6,425.30 | 0.60% | 6,154.94 | 6,389.62 |
| Brazilian IBOVESPA (^BVSP) | 66,624.00 | 0.33% | 64,954.51 | 68,035.31 |
| Mexico’s IPC (^MXX) | 32,518.98 | 0.34% | 31,528.74 | 32,805.85 |
| Amsterdam Exchange Index (^AEX) | 334.59 | 0.95% | 314.77 | 336.29 |
| New Zealand NZX 50 INDEX GROSS (^NZ50) | 3,151.77 | -0.30% | 3,010.79 | 3,128.79 |
| China HANG SENG INDEX (^HSI) | 21,167.27 | 0.37% | 20,638.80 | 21,552.62 |
| Korea KOSPI Composite Index (^KS11) | 1,784.36 | 0.29% | 1,736.79 | 1,787.54 |
| Tokyo NIKKEI 225 (^N225) | 9,098.39 | 0.82% | 8,925.59 | 9,607.39 |
Better than expected economic news led to further gains amongst US indices as the market continues to climb a wall of worry. Jobless claims and the Trade Deficit reported Thursday morning were both better than expected, leading to an instant appreciation of key indices. But as the day wore on, the indices got worn out, faltering from their highs to end at approximately half of their value at the day’s peak. The 200-day moving average continues to act as a barrier, resisting any momentum that the day’s action may provide. It remains a matter of wearing out that level of resistance until it is broken before the market is worn down once again. But for now, despite the dismal volumes, a sell signal has not been revealed.
A correction of the overbought imbalance continues to be sought, but it becomes extremely hard to justify a downside play with optimistic news continuing to stream across the wires. This is in stark contrast to the action in August that was bombarded by news of the negative. These two timeframes have seemingly canceled each other out and we are now reclaiming the levels previously held mid last month. No doubt that this is a traders market as unexpected negative and positive news spurs a flurry of activity. Not exactly a scenario an investor seeks when looking to profit from market trends.
Put volumes remain high, dominating over that of calls by a ratio of 1.06 to 1. Traders continue to have the downside bets in place by way of puts for the purpose of hedging long positions or speculating on a collapse from current levels. Sell signals have remained absent from the put/call analysis since the buy signal produced on August 30th. So, for the time being, until the charts say different, a “buy” signal remains in effect.
Sector that Moved the Market
| Sector | % Price Change | % Volume Change |
| Energy Sector (XLE) | 0.20% | -15.80% |
| Basic Materials Sector (XLB) | -0.34% | -5.88% |
| Financial Sector (XLF) | 1.26% | 57.65% |
| Health Care Sector (XLV) | 1.06% | -7.96% |
| Consumer Discretionary Sector (XLY) | 0.09% | 15.20% |
| Industrials Sector (XLI) | -0.10% | -22.47% |
| Technology Sector (XLK) | 0.28% | -25.22% |
| Utilities Sector (XLU) | 0.99% | 10.42% |
| Consumer Staples Sector (XLP) | 0.33% | -13.44% |
Materials took a dive on the day as gold faltered, leaving many to cash out of gold mining equities that have recently produced technical sell signals. With this safe haven play temporarily topped out, it will be interesting to see how sellers of these equities allocate assets as this could pose an influence to further upside in the equity markets should these investors choose to take the plunge. However, thoughts are that these assets will be substituted for either cash, commodities or fixed income products. But remember, with variable (both positive and negative) news events continuing to drive the tape, the money could be put right back into these assets just as fast as they were taken off as safe haven plays such as this regain favor.
Financials were the leaders on the day as takeover rumors spread on the basis that cash endowed banks will be seeking acquisitions to increase their earnings base. Speculation on which banks will see this “acquisition benefit” is causing a flurry of activity by investors seeking to cash in on the M&A trend.
S&P 500 Index
Chart Courtesy of StockCharts.com
| Support 2 | Support 1 | Pivot Point | Resistance 1 | Resistance 2 |
| 1096.08 | 1100.13 | 1105.20 | 1109.25 | 1114.32 |
Total Returns
Yesterday: 0.48% – Trailing 5 days: 1.29% – Trailing 30 days: –1.51%
Averages for current day based on past 20 years of data
- Current Day: –0.10% with 60.00% of sessions gaining
- Next 7 days: 0.58% with 64.00% of sessions gaining (Max return: 1.33% by September 13 on Average)
- Next 30 days: –2.11% with 49.43% of sessions gaining (Max return: 2.38% by September 21 on Average)
TSE Composite
Chart Courtesy of StockCharts.com
| Support 2 | Support 1 | Pivot Point | Resistance 1 | Resistance 2 |
| 11930.77 | 11982.15 | 12049.10 | 12100.48 | 12167.43 |
Total Returns
Yesterday: –0.07% – Trailing 5 days: –0.64% – Trailing 30 days: 1.65%
Averages for current day based on past 10 years of data
- Current Day: 0.54% with 42.86% of sessions gaining
- Next 7 days: 0.32% with 56.00% of sessions gaining (Max return: 1.44% by September 10 on Average)
- Next 30 days: –3.46% with 46.61% of sessions gaining (Max return: 2.76% by September 21 on Average)
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