fusion research - major index review for june 12th 2012

7/31/2019 Fusion Research - Major Index Review for June 12th 2012

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Fusion Analytics Research Partners LLC 2012 FusionAnalytics P 212-661-2022

June 12th, 2012 Equity Market Review

In the ollowing note, we take a look at some o the widely ollowed U.S. indices. As seen below, most o these indiceshave a similar pattern, broken and bouncing along near support. As they say, a picture is worth a thousand wordsand the story this picture tells is certainly a story that U.S. markets are still reeling, despite their recent bounce.

Yesterdays trading activity was a bit discouraging as it appeared to be the classic buy the rumor (buy the Spain bail-out), then sell the news. This sell the news session occurred or most indices right at overhead resistance. As wehave said or a while now, with summer seasonality, sporadic - and at times - conicting news ow out o Europe, U.S.indices would likely have a summer very similar to last year. Given the technical damage that many o these indiceshave suered, we will need more evidence, in the orm o bases orming, beore we can suggest a real turn has oc-curred. That said, in the absence o proper bases at present, tactical trading will likely be the most successul strategy.Stated another way, hit and run strategies seem to make more sense at present, as opposed to getting comortableand setting up a base camp. In trading environments like these it doesnt pay to be a hero or frst one on the battle-feld, but rather, it pays to wait or reinorcements and ground to be gained, beore jumping in the ray.

Bottoms tend to be a process, not a singular event, and typically occur when everyone becomes exhausted romtrying to call them and being wrong. At present, investors continue to look or the bottom with every tick down.Consequently, we dont think weve seen one yet. That said dont ret youre going to be late to the party, or i a realand durable move is about to occur, not catching the low wont put you at a disadvantage.

S&P 500 resistance remains in the 1,336 to 1,340 zone, while support lies in the 1,270 level. Meanwhile, over on theNASDAQ Composite, resistance remains in the 2,900 to 2,890 area, with support at the 2,725 level.

Now lets move to the major indices on the pages below.

Summary


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KBW Bank Index (BKX) - Daily Chart

Dow Jones Transportation Index (TRAN) - Daily Chart

The Bank Index hit lower support zone(green shaded lines) near 40, had anominal bounce, but remains ar belowsupport. Unless something horrifc comesdown the pike, we would expect thebanks to build a base in and around thissupport level or just slightly lower.

The Transportation Index is locked in arange below resistance 5,100 to 5,200 (redshaded lines) and support 4,800 to 4,700(green shaded lines). A breakout above

or below support will tell us a lot aboutwhere the U.S. economy is tracking.

$ ow trends remaindistributive



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Morgan Stanley Consumer Staples Index (CMR) - Daily Chart

AMEX Broker Dealer Index (XBD) - Daily Chart

The Consumer Staples Index is also rangebound. The Index is locked in a rangebelow resistance 790 to 780 (red shadedlines) and support 760 to 750 (greenshaded lines)



The AMEX Broker Dealer Index has been one o the weakerindices and recently broke support, which has now becomeresistance, in the 90 to 88 area (red shaded lines). Thenext real support is the all 2011 lows near 76 to 74 (greenshaded lines)


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Philadelphia Oil Service Index (OSX) - Daily Chart

AMEX Natural Gas Index (XBD) - Daily Chart

Commodity related equities like the Oil Service Index components have really been takenout back and shot. The OSX is testing support in the 198 to 190 zone (green shaded lines)and needs to hold, otherwise its next stop is the all 2011 lows.



Not much dierentiation on the AMEX NaturalGas Index, which is trading below resistance (redshaded lines) in the 610 - 600 area. No real sup-port exists here until the all 2011 lows.


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Morgan Stanley Health Care Payer Index (HMO) - Daily Chart

Philadelphia Utility Index (UTY) - Daily Chart


The HMO Index broke support and has now been below this area or several weeks. This brokensupport in the 2,350 to 2,300 area now serves as resistance (red shaded lines). The next real levelo support below the market is near 2,000.

The Utility Index has been the only strong group on the tapeo late, as it recently broke out above resistance near 480 ( redline). The cautionary note is that utilities tend to be a late cycleleadership group.

$ ow trends positive but moderating


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Equity Market ReviewJune 12th, 2012

fusion research - major index review for june 12th 2012

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