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Good Morning, this is Capital Essence’s Market Outlook (the technical analysis of financial markets) for Friday January 6, 2017.
Stocks closed mixed Thursday amid uncertainty over some of President-elect Donald Trump’s policies. For the day, the Dow Jones industrial average fell 42.87 points, or 0.21 percent, to close at 19,899.29. The S&P 500 dropped 1.75 points, or 0.08 percent, to end at 2,269. The Nasdaq composite rose 10.93 points, or 0.2 percent, to close at 5,487.94. The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, fell 1.52 percent to 11.67.
Newmont Mining Corp. (NEM) was a notable winner Thursday, surged 4.61% to 36.57. This is bullish from a technical perspective. In fact, a closer look at the daily chart of NEM suggests that the stock could climb up to test key price level near 46 after the downward trend halted. Just so that you know, initially profiled in our April 18, 2016 “Swing Trader Bulletin” NEM had gained about 25% and remained well position. Below is an update look at a trade in NEM.
The graphics below are from our “U.S. Market Trading Map”, show the near-term technical bias and trading ranges. As shown, the underlying is in a short-term bullish trend when the price bars are painted in green. The underlying is in a short-term bearish trend when the price bars are painted in red. The yellow bars identify period of neutral or sideways trading pattern. Additionally, the light-blue shading represents the short-term trading range. A move above or below that range is considered overbought (as represents by the red shading) or oversold (as represents by the dark-green shading). Readings above or below the red and green shaded areas are considered extremely overbought or extremely oversold.
Chart 1.1 – Newmont Mining Corp. (daily)
As indicated in the above chart, our “U.S. Market Trading Map” rates NEM as a Buy. The overall technical outlook remains Bullish. Last changed January 5, 2017 from neutral.
The first dominant feature on the chart is the rising trend starting early 2016. The second dominant feature of the chart is the summer downward trend, which represented the digestion period. The correction found support at the 50% Fibonacci retracement. Thursday’s upside follow-through confirmed last week’s bullish breakout from the August falling trend line, signify resumption of the January upswing.
Money Flow measure trended higher from above the zero line, indicating an increase in buying pressure. This is a bullish development, supporting further upside follow-through and a retest of the 2016 high, around 46.
Support is around 34. At this juncture, only a close below that level can wreck the near-term bullish outlook.
Chart 1.2 – S&P 500 index (daily)
Short-term technical outlook remains bullish. Last changed November 14 from neutral (see area ‘A’ in the chart).
[Note: for more details analysis, please take a look at our “US Market ETF Trading Map”]
The most important feature in the daily chart of the S&P is momentum. It had been relentless and up after the index set a short-term low of 2233 in late 2016. This is a short-term bullish development, suggesting that another leg up is in the works. Perhaps, the positive Money Flow measure is the best illustration for the bulls’ case.
Short-term trading range: 2268 to 2277. Over the next few days, traders should monitor trading behavior near 2277. A close above that level could trigger acceleration toward 2300. S&P has minor support near 2268. A failure to hold above that level will bring last week’s pivot low of 2233 into view.
Long-term trading range: 2200 to 2300. A close above 2300 on a weekly closing basis signify a bullish breakout with upside target around 2400 but for now it looks firm.
In summary, short-term momentum remains positive for S&P despite Thursday’s pullback. The index has a new floor, which is the old consolidation high near 2270. That’s going to act as support, setting a trend for a monster breakout.
(By：Michelle Mai for Capital Essence)
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