by Sam Collins | October 26, 2012 2:58 am
Stocks closed slightly higher Thursday after a strong start following several positive pre-opening earnings and better-than-expected economic data. But as the day wore on, more earnings failures than successes were reported and the early gains vanished.
At the close, the Dow Jones Industrial Average was up 26 points to 13,104, the S&P 500 rose 4 points to 1,413, and the Nasdaq gained 4 points at 2,986. Volume on the NYSE totaled 695 million shares, and the Nasdaq crossed 446 million. Advancers were ahead of decliners by 1.4-to-1 on both exchanges.
After the close, Apple (NASDAQ:AAPL) reported earnings that missed fiscal Q4 estimates and adjusted fiscal Q1 estimates lower. See today’s Trade of the Day for further discussion.
The long-term weekly chart has been provided to bring perspective to the current trading chart and to illustrate that the major bullish support line (approximately 1,275), as well as the intermediate support line (1,356), are still intact. The closest important support on this chart rests at 1,356, the July 2011 high, as it intersects with the intermediate support line.
On the daily chart, we see immediate resistance is at 1,418 and immediate support is at 1,397. Note the 200-day moving average at 1,377 and a long-term support line drawn from the July 2011 high at 1,356.
A breach of the 200-day moving is taken by some as a bear market number, but that is far from accurate since the bull market’s trendline is easily seen on the weekly chart at around 1,275.
MACD is oversold but could remain so for some time. Emphasis should always be first placed on the price action as related to support areas.
Conclusion: The daily chart with which most readers are familiar is for short-term and intermediate-term traders and investors. It shows that we may temporarily fall to support at 1,397. More important support is at the 200-day moving average at 1,377 and the July 2011 high at 1,356.
The point is this: Despite the near-term concerns, i.e., the fiscal cliff, the election, etc., there is still enough support that has been constructed over the past year to stop us from falling into a long-term bear market.
Be patient, trade if you wish, but long-term investors would be wise to wait it out for major commitments. I suspect that opportunities to buy will occur sometime in mid-November.
To see a list of the companies reporting earnings today, click here.
For a list of this week’s economic reports due out, click here.
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