Editor’s note: this column was originally published on Capital Essence’s CEM News. It’s being republished as a bonus for the loyal readers. For more information about subscribing to CEM News, please click here.
Good Morning, this is Capital Essence’s Market Outlook (the technical analysis of financial markets) for Wednesday December 14, 2016.
Stocks closed higher on Tuesday as traders await key Federal Reserve meeting. For the day, the Dow Jones industrial average rose 114.78 points, or 0.58 percent, to 19,911.21. The S&P 500 gained 14.76 points, or 0.65 percent, to close at 2,271.72. The Nasdaq composite advanced 51.29 points, or 0.95 percent, to 5,463.83. The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, rose 0.63 percent to 12.72.
Take-Two Interactive Software Inc. (TTWO) was a notable winner Tuesday, jumped 1.64% to 50.85 – a fresh 52-week high. This is bullish from a technical perspective. In fact, a closer look at the daily chart of TTWO suggests that the stock could climb above 56 in the coming days. Just so that you know, initially profiled in our November 14, 2016 “Swing Trader Bulletin” TTWO had gained about 7% and remained well position. Below is an update look at a trade in TTWO.
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 – Take-Two Interactive Software Inc. (daily)
As indicated in the above chart, our “U.S. Market Trading Map” rates TTWO as a Buy. The overall technical outlook remains Bullish. Last changed November 23, 2016 from neutral.
TTWO has been on a tear in recent days after the late November correction found support at the trend channel moving average (as represents by the white line in the chart). Money Flow measure held firmly above the zero line since the stock reached an interim low in October, indicating there was little selling interest. Tuesday’s upside breakout had helped clear resistance at the November high and the 127.2% Fibonacci extension, signify a bullish breakout with upside target around 56, based on the 161.8% Fibonacci extension.
Support is around 49. 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”]
Tuesday’s bullish breakout invalidated Monday’s bearish reversal signal. Money Flow measure is registering a weak bullish signal as it trended slightly higher from above the zero line. These elements certainly would argue that the near-term risk remains to the upside.
Near-term, market craved out key support and resistance for traders to monitor. The lower end of the red band, around 2253 represent key support. A retest of 2200 should be expected if that support gives way.
The range top, around 2300, represents key resistance. As mentioned, a trade above that level indicate an extreme overbought zone – a situation that often precursor to a meaningful downside correction so traders should put it on the trading radar.
In summary, although overbought condition is keeping buyers at bay, the 2300 level on the S&P 500 index continues to act as price magnet. So, it should not be surprising to see stocks drifting higher into the end of the month.
(By：Michelle Mai for Capital Essence)
© All rights reserved and actively enforced.
Note: This is a free edition of The Market Outlook, a daily CEM News subscriber newsletter. To get this column before market opens together with hundreds of technical trading ideas (including stocks and ETFs) every month, please click here.
Subscribe to CEM News to receive more in-depth research from Capital Essence.
