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Weekly Technical Commentary by Art Huprich - Friday Morning 01/09

Similar to how many communities and small business owner’s act when WMT enters their market; Wall Street was cringing yesterday, following the release of WMT’s sales figures and the company reducing their outlook for Q4. Consequently, the DJIA recorded its intraday low within the first hour of trading, down 118 points. By the close, however, the DJIA and the broad market recovered nicely. The DJIA fell 27 points as WMT, down $4.16 at the close, accounted for 33 “negative” points in the final calculation of the DJIA. The NASDAQ gained 18 points as its short-term relative strength trend, versus the SPX, moves higher.

On the NYSE volume contracted to 1.18 billion shares. There were 766 net advancing issues, which is an excellent number relative to the DJIA. New 52-week lows (9) lead new 52-week highs (1) on the NYSE, but over on the NASDAQ, new 52-week highs (12) beat new 52-week lows (9). The Oversold Overbought Oscillator ended its fourth consecutive day in “overbought” territory, closing yesterday at plus 8.0; expect more “pause / pullback” action.
Conclusion

On a short-term basis, in terms of making trading decisions, a technical analyst is far more concerned about “reaction to news, then news itself.” Today’s employment report and the upcoming earnings reports will be a good example of such. So far, the stock market has shaken off bad news from INTC, WMT, and a host of other companies, not withstanding some of the worst economic news I can remember, over the past few months.

An ability to absorb and contain bad news is a bullish short-term event. Otherwise, please use the support levels shown yesterday for the SPX accordingly, specifically 875 (trend line) and between 857 and 851.

For full technical Commentary and Charts:

http://www.rjf.com/technical_commentary.asp

George.

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