Daily market commentary for Thursday, Sept 27, 2006

Posted on Wed 27th Sep, 2006 08:11:27 PM

Written By: Teresa Appleton Stock Forum ID: Teresa

Wednesday, I can sum up in a few words. NOT the type of action to fall in love with. How is that to say I didnâ€™t really enjoy what the day had to offer. The Nasdaq 100 closed red, while the Nas Composite, S&P 500, and Dow closed modestly green. Volume was very close to yesterdayâ€™s leaving the NYSE slightly lower and the Nasdaqâ€™s slightly higher. So that is pretty much a non issue. Are we running out of steam up here? That is the question everyone is speculating about. So instead of speculating we are going to dissect what we do know and leave the unknown for others.

Crude rallied off some speculation that OPEC may cut production to close up $1.95 at $63.10. Gold closed the day over $600 for the first time in two weeks at $603.30 up $6.20 on the day.

I said last night we would likely open lower today and we did. Thanks to Durable orders putting a big problem in the bullish action. Which the market quickly forgot about when the New Home Sales data said oh maybe the slow down isnâ€™t that bad and we saw an increase in sales, then Crude inventories showed we donâ€™t have a shortage. Geopolitical fears and hurricanes seem to be a forgotten problem as OPEC starts thinking about cutting production.

Best Dow performers were MO, GM and INTC. All of which are normally pretty quiet, but probably the best trading opportunity to come from the Dow will be on the DIA and also I like MCD. Both should have some nice downside as we hit the all time highs on the Dow (we were within points today) and get through end of quarter and end of month window dressing. That will be a top priority trade.

The broker sector is on watch for a possible bearish engulfing pattern. A lower close Thursday would confirm the pattern. GS, LEH, BSC, MS all should be watched for lower ground if that pattern confirms. They were all on fire off earnings releases two weeks ago and now have been consolidating at the highs. Keep watch on the banks which are also at resistance, remember 20.7% of the S&P 500 is made up of financials.

Thursdayâ€™s volatility should pick up going into the inflation data release into pre market. The tone for the day is likely to be set by this data and we have additional data Friday to fuel the volatility. Also we are seeing the market slow down, it was possibly awaiting the end of the week to settle the quarter. So far things look very positive on the quarters gains and even the month. September came out and surprised everyone and all those historical trend followers are definitely thinking WOW where did this come from. Historically September is not a healthy month for the bulls, for those that didnâ€™t listen to that congrats and play it as you see it was the way to go. Will we pullback Thursday or Friday is anyoneâ€™s guess, but we are definitely getting into seriously high levels where we need to rest. That is likely to come next week though. So a pullback now would be respected and likely to be bought to rally us into the end of the quarter. Until we see the sellers outweighing the buyers we have to assume dips are bought.
ES put in a modestly green day to make it three consecutive up days.. The weekly pivot is 1329 with a daily pivot for Thursday is 1347. The weekly resistance 1 at 1337, 2 1348 and 3 is 1367, so keep those in mind. Keep in mind that RSI on the 60 minute is getting into the nosebleed section at 65.42 and daily was 68.24 at the close today. Support: 1343.25, 1341, 1337.25 and 1334.25. Resistance: 1348.50, 1351.50, 1355.75.

Some earnings for next week of interest: Thursday pre market AM, FDO and after the bell CAN, ESIO, RIMM, TXI. Friday pre market MAG.
Economic data: Week of September 25^th â€“ September29^th Thursday 08:30 Chain Deflator-Final, 08:30 GDP-Final, 08:30 Initial Claims, 10:00 Help-Wanted Index, Friday 08:30 Personal Income, 08:30 Personal Spending, 09:50 Mich Sentiment Rev, 10:00 Chicago PMI

Lets look at some charts:
NDX (Nasdaq 100) closed -3.53 at 1655.67. Support: 1642.56, 1632.09, 1627.48 200dma, 1623.43, 1617.64. Resistance: 1661.32, 1680.52, 1701.98 and 1721.13.