On the web since 1997
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On the web since 1997 |
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At The MarketplaceLuke Hodgens / Powerhouse Profits -- This past weeks action has been dictated solely by the price of oil. The NYMEX market was closed on Monday, as well as all other U.S. banking and investment institutions, for the celebration of Presidents Day. When the opening bell rang on Tuesday morning, the oil market went for a ride on a moon ship. Some unexpectedly cold weather in the northern U.S. and Europe, combined with a dollar scare sent crude futures up almost 5% on the day. The equities markets nearly bled to death.It wasn’t a pleasant way to return from a three day weekend. The Dow dropped 174 points, the NASDAQ shed 28 points and the S&P 500 fell 17. The oil scare sent stocks reeling. After OPEC announced it may increase production to slow skyrocketing prices, the oil market cooled…only slightly. Wednesday came and went mostly uneventful. The Dow managed to regain 62 points, the NASDAQ recuperated a fraction of 1 point and the S&P 500 added 6.6. Wednesday’s oil trading was much more docile compared to the day before, with crude giving back 25 cents per barrel. The bounce off oversold conditions continued on Thursday. The Dow gained 75 points to finish at 10,748, just 37 points below last Friday’s close. The NASDAQ added 20 points to 2,051 finishing just 7 points below Friday’s close and the S&P 500 added 9.4 points to finish at 1,200, or only 1 point lower than Tuesdays mammoth sell off. Oil added 33 cents on the day. Combine $50+ oil and technical damage done on Tuesday, and we could be headed into a short term bear market. Tomorrow’s (Friday) action is paramount. If stocks cannot continue to build on the short bounce rally, we could be in for a slow downward bleed. We are seeing very strong support for the Dow at 10,479 with short term support at 10,600. Resistance sits at 10,845. Support for the NASDAQ lay at 2,008 with strong resistance at 2,066. The S&P 500 is showing good support at 1,190 and resistance at 1,213. Although we’ve gained back almost all that was lost on Tuesday, oil prices are going to hang heavy on the market. These support and resistance levels do not take into account investor sentiment or energy cost. Therefore, I believe that if oil doesn’t back down below $50, we’ll see equities test these support levels very soon and perhaps break through if oil rallies to $55. However, if oil does drop, we are technically ready for a move higher. All resistance levels are within two trading days, perhaps one on good news. Luke Hodgens is the editor of |
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