Prepared by Geoff Bysshe, President of MarketGauge, filling in for Mish until May 7th.
Why was everyone afraid of AAPL?
All eyes were on APPL today, but all "they" did was watch!
Apple delivered another blowout quarter, leading to a broad tech rally which put QQQ well over its 50 DMA, and creating an island-like bottom pattern. Curiously, despite all the excitement AAPL's volume was less than exciting as I'll cover in the stock specific commentary.
Strength was now limited to the tech sector. Financials, agriculture chemicals, railroads and other areas were also strong helping push the DIA, and SPY's also safely over their 50 DMA. The IWM, however, remains in warning phase territory. We'll see if tomorrow can deliver a second daily close over the 50-day and confirm the move back to a bullish phases in the major indexes.
The Fed's announcement policy announcement and press conference proved uneventful.
S&P 500 (SPY) Back into Bullish phase territory, but must close over the 50-day tomorrow to confirm. The key level to break for more upside potential is the multi-week high of 139.36.
Russell 2000 (IWM) Rallied with the rest of the indexes but still sits below its negatively sloped 50 and 20 DMAs. Lot's of resistance at 82 and support at 78 so it's more likely to follow than lead.
Dow (DIA) The laggard of the 4 market watch only up .75% on the day, but like the SPY it's back over the 50 and 20 DMA. It's also near the top of a multi-week range with an important high of 131.13. On the downside watch out for trading below today's low area - 130.
NASDAQ 100 (QQQ) Draw the trend line on the daily chart from the highs in March. A break of today's high will also break the trend line and confirm the return of the bullish phase. Price action suggested a big bullish day today, but volume was not as impressive. Today's range was also set in the first half hour of the day, so there is enough consolidation to push the market either way tomorrow.
GLD Tested a key support area of 158 with a swift spike low, and then closed near the high of the day. The trend remains weak, but today was a good test of a basing pattern.
XLF (Financials) Second daily close over the 50 DMA confirming the bullish phase, but still needs to clear last week's high of 15.51 to look strong. Note the KRE did manage to clear its prior week high.
IBB (Biotechnology) Nice strong day breaking out of 4 days of consolidation. Looks like it wants to go much higher.
SMH (Semiconductors) Still has not closed the gap lower from 4/23! 34 fills the gap, but even then it will look weak.
XRT (Retail) Managed to recover from a very big volume down day yesterday, and close over the 50 DMA. See if it can hold up tomorrow.
IYT (Transportation) Draw the wedge on the daily chart from the lows in Feb. and the highs in March.
IYR (Real Estate) Very impressive breakout of the 52-week high area of 63 which has stopped it at least 7 major times in the last year. This will go much higher if it can hold over the 63 level.
OIH (Oil Services) Relatively weak today and acted like the weak group that it has been for month, but it is basing, and the 10 DMA as turned up.
XLE (Energy) Back to the high of its tight multi-week base at the 200 DMA. A break above 70.41 would fill the gap from weeks ago that has defined the high of the base, and could make this an interesting long candidate.
TBT (Ultrashort Lehman 20+ Year Treasuries) Big range day ending in a doji.
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:
Nothing under the pivots after today's big gap up.
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:
Nothing under the pivots after today's big gap up.
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:
AAPL Blowout earning and a 9% move high, but volume was below average and lower than the last 3 days. Furthermore, the day's range at about $12 was set in the first 30 minutes. It's poised to go either direction so I'd only be long above today's low and preferably above 620.25. I most likely needs a long rest.
EOG Prefer a reversal
CF Very nice volume, breakout or reversal
DLTR Should be above FTP 98.37
VVUS A volatile stock with a nice volume breakout. Like a breakout or reversal.
DO Two consecutive inside days. Must clear 68.80
FFIV Inside day. Must clear 130.85
ROST Has consolidated for a weak in a strong trend. Daily break out is 60.54. An OR reversal would work too.
COF Inside day after a very tight two weeks. Must clear 55.20
BBBY First close over a prior day high since huge breakout on 4/5. Flag looks like it has big potential.
WYNN Nice volume today, but prefer to have it stay over the pivot area of 128.
AGU Nice breakout of a daily wedge. Prefer a reversal.
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:
Nothing under the pivots after today's big gap up.
Shorts:
PPO Must be below pivot, 36.70
X Inside day and pivots are positively stacked so must be below pivot, 28.00
NUE Must be below 39.25
SINA Two consecutive inside days so it could go either way, but the trend is down. Must be below pivot 56.82. 56 is also a key level of support to break.
APC Bear flag back to the 10 DMA, but pivots are stacked positively so must be below pivot, 72.62.
KSS Inside day, must be below pivot 49.76.
FDX Very weak today. Reversal or breakdown.
Goodnight!
Geoff Bysshe
President