WizzWatch Weekly Newsletter 07.20.09 – 07.24.09

As the past week came to an end all three major indices moved higher. The Dow, Nasdaq and S&P 500 all ended the week on the upside after four weeks of declines. Second quarter earnings started off with a bang as many companies reported stronger than expected earnings announcements. Companies such as Intel, IBM and Bank of America reported earnings during the past week. Next week many investors anticipate another strong week of earnings announcements from Microsoft, Yahoo and Apple to name a few. Earnings estimates were beaten by 24 percent of all 28 companies that have reported earnings since July 8. The top industry groups that lead the market higher were gold and silver, oil services, commodities, networking, and chemicals. Insurance, pharmaceuticals, and transportation were the losers but they too ended the week slightly on the upside. Many investors and analyst alike think that the biggest financial mess in history is now over but only time will tell going forward.

At the Dow Jones Industrial Average there was a slightly higher move to the upside after four weeks of declines due the investors selling shares in fear of a correction after weeks of upside price momentum. The Dow started out the week trading at 8,146.82 dropped to a low of 8,146.52 but ended the week much higher. The Dow move to the upside breaking above its 5, and 10 week moving averages for the first time in three weeks. Volume was also on the downside during the pullback in the Dow so there was no need for investors to be scared as the market declined. The Dow Industrials ended the week trading at 8,743.94 up 597.42 or 7.33 percent on volume of 5.5 billion. The index is poised to continue its upside momentum in the week ahead, but will need to break above upside resistance in the 8,878 area.

As for the Nasdaq Composite Index it also moved higher after starting the week trading at 1,761.03. The tech weighed index moved to the upside after failing to break downside support below 1,737.05. Technology stocks climbed for the seven days in a row its longest streak since October 2007. The index is currently above its 5, 10, and 50 week moving averages and will continue to move higher if it can break through upside resistance in the 1,879.92 area in the week ahead. The Nasdaq ended the week trading at 1,886.61 up 130.58 points or 7.44 percent on slight lower than average weekly trading volume of 10.27 billion. The average weekly volume for the Nasdaq is 10.74 billion.

The Standard and Poors 500 also moved higher to end the week after four weeks of declines as retail sales boosted consumer related stocks. Stocks such as Goldman Sachs and Johnson and Johnson help to lift the S&P higher after they both beat earnings expectations. The index opened the week trading at 879.57 dropped to a low of 875.32 but ended the week trading much higher. The S&P is currently above its 5, 10, and 50 week moving averages but below its 200 week moving average at 1,259.51. Upside resistance for the index is at 956.23. A break above resistance will take the S&P 500 much higher in the near term. The Standard and Poors 500 ended the week trading at 940.38 up 61.25 points or 6.97 percent higher on slightly lighter than average volume of 21.7 billion, the average weekly trading volume for the index is 22.6 billion.

The Gold Index ended the week on the upside this week as the dollar yen posted its biggest decline since May. The index will continue to move higher in the near term, but as the economic conditions around the world improve we can expect the price of gold to weaken. The Gold index has been on a decline for 5 of the past 6 weeks but is now poised to move higher in the near term due to the pullback in the dollar. The index is currently above its 5, 50, and 200 week moving averages but need s to break above the 10 week moving average in order to move higher. As the economic conditions get better we may see a pullback in the price of gold going forward, but as for now it a process of wait and see. The index opened the trading week at $912.30 moved as high as $942.10 but ended the week trading at $937.40 up $24.40 or 2.67% higher.

As for the oil index there was also an uptick in the price of crude oil after weeks of declines. Crude oil moved higher to end the week as construction to single family homes jumped 14 percent, the most since 2004. The jump in construction is a sign that the worst may be coming to an end as the economy starts to recover. The oil index moved higher to end the week after starting out the week trading at $$60.80 per barrel. Downside support on the oil index is currently at $52.85 per barrel with upside resistance at $73.90. The oil index is below its 5, 10, 50 and 200 week moving average for now but above it 32 week moving average. In order for the index to move much higher in the near term oil must move above its 5 and 10 week moving averages. The 10 week moving average is currently at $65.65 as the 5 week is at $66.08. A move above both moving averages will lift the price of crude oil higher going forward, crude oil ended the week trading at $64.58 up $4.69 or 7.83% higher.

*** Please have a look at the charts below ***

By: Marlin Rolle