Last week ended lower than the week prior. But stepping back, the market is still really close to the multi-year highs. That suggests that not only is the current bull phase alive and well, but also that fundamental and technical concerns could not keep a good market down. The retail (XRT) and financial sectors (XLF) kept us feeling confident in the market as the year began. Neither closed all that great last week. Furthermore, the divergence remains very much alive with certain stocks ugly and others stratospheric. Bottom line: a stock pickers market both long and short and treacherous for those who are not students of risk/reward.
S&P 500 (SPY) If the week begins over 140.25, would keep a friendly bias. Beneath 140, more cautious with 138.65 last swing low support to hold
Dow (DIA) 129.71 last swing low with 129.55 the 50 DMA. Also could see early strength over 130.75.
NASDAQ 100 (QQQ) Second close under the fast moving average. If clears Thursday and Friday highs, good sign. Otherwise, 68.50 level looks double toppish.
Russell 2000 (IWM) Doji and unconfirmed weak warning phase. 81.00 was a level we wrote a lot about several weeks ago. Still a support area to hold.
ETFS:
GLD Unless it crosses and closes above 163, see more downside in the works
XLF (Financials) Barely held 15.50 ending the week with a hammer candle. Since it has worked off all overbought conditions, looking for the buy opportunity.
IBB (Biotechnology) Closed well even if it was not at the weekly high
SMH (Semiconductors) Inside day. That's pretty sideways action. Not my first choice of sector to buy until it convincingly holds the 50 DMA with more time on its side.
XRT (Retail) With all the great news about retail, very disappointing close. If this corrects to the 50 DMA, probably a great reentry point.
IYT (Transportation) Hanging tough with an inside day to end the week.
IYR (Real Estate) 2012 monthly clearance of the moving average intact. Shorter-term, watching the 50 DMA. Over 62.00, would not hesitate to buy
OIH (Oil Services) Approaching oversold with a hammer candle and 39.66 last swing low to hold.
XLE (Energy) 70.12 the 200 DMA.
TBT (Ultrashort Lehman 20+ Year Treasuries) Closed down from the week before. TLT bounced from 110 and its 200 DMA. What keeps traders alive is flexibility which means as much as we think rates have bottomed, have to respect the charts.
Longs: On categories: Gap higher days we go to all categories and choose ones with lowest risk that break the opening range. On weaker days, we look at Category 3, especially if the picks hold S1, previous day lows or a major moving average and have a good risk on the reversal. The difference between Category 1 and 2 is the stock condition-a Condition 1 is strongest stock and more likely to make a parabolic move.
Category 1: (Aloha) Positive Phase, Condition 1, 2 days under the FTPs, Risk to Previous Day low, Can buy ½ over FTP and ½ over R1, Target- Day to at least 3 ATRs from entry:
NONE APPLICABLE
Category 2: (Pipeline) Positive Phase, Condition 2-3, 2 days under the FTPs, Risk to Previous day low, Can buy ½ over FTP and ½ over R1, Target- Day to at least 3 ATRs from entry:
DLR 3 days under the FTP, must hold Friday low, clear 73.68
CIE Condition 3 and 2 days under the FTP must hold 30.40 and clear R1 30.90
DFS Had 2 days under the FTP closed above Fri, but stack negative. Must hold 33.00 and clear 33.23
UPS (Condition 4) Had 2 days under the FTP closed above but stack negative. Must hold 79.90 and clear 80.49
Category 3: (Double Up) Positive Phase, Condition 1 through 4, Positive Pivots which means candidate for Opening Range Reversal, Risk S1 or previous day low, whichever is lower unless noted differently, Target- Day to at least 3 ATRs from entry:
BIDU Prefer a reversal against 146.90 level
KSU Can buy strength or reversal provided Friday's low holds
CRM Prefer a reversal against 156.35 level
FOSL Prefer a reversal against 136.75 level
LULU Prefer reversal against 76.30 level
HUM Strength or reversal against 90.96 level
REGN Can buy strength or reversal against 122.70 level
V Prefer reversal against 120.00 level
PX Can buy on strength or reversal, must hold 113.28, ideally clear 114.29
AMGN (Not a condition) Can buy strength or reversal, risk to 67.40. Trendline on weekly with possible bullish wedge.
Category 4: (Rip Tide) Oversold (2 or more days under FTP), Condition 1-4, Needs to clear R1, Risk previous day low unless noted differently, Target- Day to at least 3 ATRs from entry:
GOOG Negative pivots. Clearing Friday's high also clears R1-earnings 4/12
FDX (Not a condition) must hold Friday's low and clear 90.66
XEC (Not a condition) oversold and on the 200 DMA at 69.93 whch must hold and clear 72.57
Shorts: Lots oversold
POT Cannot clear 45.79 and could see 43.75 or lower
CE Positive Pivots must not clear 45.87 and break Friday low 43.00 support
SPN Must not clear 27.02. 2011 low 22.19
CHRW Must not clear 65.41 could see 63.50 or lower
APKT Cannot clear 26.80, under 24.88 could see 20.00
Have a Great Sunday!