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Good Morning, this is Capital Essence’s Market Outlook (the technical analysis of financial markets) for Thursday June 9, 2016.
Stocks closed higher Wednesday amid higher oil prices and weaker U.S. dollar. Oil futures settled up 87 cents, or 1.73 percent, at $51.23 a barrel, its highest settle since July 15 after EIA data showed a draw of 3.2 million barrels in crude. For the day, the Dow Jones industrial average closed up 66.77 points, or 0.37 points, at 18,005.05. The S&P 500 closed up 6.99 points, or 0.33 percent, at 2,119.12. The Nasdaq composite closed up 12.89 points, or 0.26 percent, at 4,974.64. The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, rose 0.21 percent to 14.08.
Cynosure Inc. (CYNO) was a notable winner Wednesday, soared 4.8% on strong volume to 52.65 – a fresh 52-week high. This is bullish from a technical perspective. In fact, a closer look at the daily chart of CYNO suggests that the stock is in an early stage of a new upswing that projects to 56.50 at minimum but has an overshoot target over 63. Just so that you know, initially profiled in our May 16, 2016 “Swing Trader Bulletin” CYNO had gained more than 12% and remained well position. Below is an update look at a trade in CYNO.
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 – Cynosure Inc. (daily)
As indicated in the above chart, our “U.S. Market Trading Map” rates CYNO as a Buy. The overall technical outlook remains bullish. Last changed March 18, 2016 from neutral.
CYNO is on a tear in recent days after the late April correction tested and respected 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 February 2016, indicating there was little selling pressure. Wednesday’s upside breakout had helped clear resistance at the April high, signaled resumption of the February upswing projects to 56.50, based on the 127.2% Fibonacci extension, at minimum but with an overshoot target over 63, based on the 161.8% Fibonacci extension.
Support is around 50. At this juncture, only a close below that level can wreck the near-term bullish outlook.
Chart 1.2 – S&P 500 index (daily)
Near-term technical outlook remains bullish. Last changed May 24 from neutral (see area ‘A’ in the chart).
[Note: for more details analysis, please take a look at our “US Market ETF Trading Map”]
Despite the short-term overbought conditions, S&P continues drifting higher. Key technical development in Wednesday trading session was a close above the lower edge of the red band – or extreme overbought zone. Money Flow measure still holds near 6-week low, indicating less and less money chasing stocks higher. This could put a cap on the rally.
For the near term, the market has carved out key short-term resistance and support levels for traders to monitor. The bull market high of 2134 will continue to act as price magnet. That level roughly corresponds with the range top resistance. As it was the case over the past months, a trade above that level often marked short-term market top so traders should put it on the trading radar.
Support is around 2100-2085. A close below 2085 will bring the important sentiment 2000 mark into view.
In summary, although short-term overbought condition is keeping buyers at bay, bull market high of 2134 will continue to act as price magnet. This could help putting a short-term floor under the market. As for strategy, traders should consider purchase stocks during short-term dips in the market and stay bullish.
(By：Michelle Mai for Capital Essence)
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