NEW YORK (Dow Jones)–Shares of search-meister company Google (GOOG) and shares of Chicago Mercantile Exchange Holding Inc. (CME) have virtually no fundamental connection – except being pricey. Perhaps that’s a virtue now that shares of almost any existing U.S. investment bank can be had for a song.
But a technical glance at a couple of lush stocks like the CME and Google shows that even the rich have their problems.
For example, shares of Google are trading near $451 as the result of a technical breakdown below $569.67 weekly support in January. Of course, an uptrend on the weekly chart would require a move above $569.67. Such a move may be in place if shares can take out $468.44 resistance.
If they can’t, then traders can reasonably anticipate a downtrend to initial support at $349.47.
Chicago Merc Gets Mercurial
Shares of the CME, similarly, broke down on the weekly chart in February when they took out $540.26 support. The resulting downtrend hit a low of $282.04 in last July. Current trading near $398 shows that shares are technically strong above $345.42 support. On the other hand, an uptrend on the weekly chart awaits a decisive move above $531.56, as it turns out.
The Baleful Stock Market
Whether or not the U.S. government bails out distressed institutions, or whether it simply bails, the market will have the last word in any case.
The Dow Industrial Average would be breaking out on the weekly chart if takes out 11839.60 resistance. The weekly breakout points for the S&P 500 and the Nasdaq Composite are 1286.68 and the 2391.30 to 2408.50 band, respectively.
(Stephen Cox, a chartered market technician, is chief technician for Dow Jones Newswires.)
-By Stephen Cox, Dow Jones Newswires; 201-938-2064; stephen.cox@dowjones.com