Today's report has been prepared by Geoff so Mish could take a much deserved long weekend...
Basically unchanged for the week!
If you look at the 3 of the 4 stock indexes - SPY, QQQ, and DIA they ended right about where they started.The IWM closed nicely higher - up 1. 7%, but that does not tell the real story.
All experience the deepest correction they've seen all year only to quickly recover. This leads us to ask the age old question of - was it a healthy relief of excess enthusiasm or the first hint of a bigger problem to come for the bulls.
The answer is not yet unanimous...
NASDAQ (QQQ) The only index to not only reach a new high on the year, but also achieve a new closing high. There is no reason to expect the Q's to give up their leadership position so the bulls should look for the Q's to hold above Friday's lows (64.82) and then the 64.50 area where you'll find the 10 DMA and a 3-day pivot low. Don't assume Friday's high will easily be taken out however. 6 of the last 8 days have a daily high between 64.94 and 65.12 so this area may serve as significant resistance if the market gets caught below it.
S&P 500 (SPY) The late February high of 138.19 is the key number to clear for the upside, and support should be anticipated at Friday's lows and the 10 DMA of 136.86.
The Dow (DIA) The DIA has the dubious honor of being the only one for the 4 indexes that had its high of the week put in on Monday rather than Friday, which suggests that if the market is going to head lower we may see it here first. A break below Friday's low, 128.94 will also put it back below negatively sloped 10 and 20 DMAs. That's your first red flag to watch out for. The next key level of support is 128.50.
Russell 2000 (IWM) Despite the IWM's ability to outperform the SPY and Q's by a factor of 3x (+1.7% vs. +.48%) it still could not close near its high for the year or even over its negatively sloped 20 DMA. Like the DIA, weakness may show up here first. Key levels for it to hold are 81.00 and around 81.70. Expect resistance at Friday's highs of 82.15 as well as 82.40 and 83.00
ETFs:
GLD Very strong recovery from a very weak open. Subs: Looking for the momentum to continue to give us our 1.5 ATR target.
XLF (Financials) It squeaked out a second weekly close over the 200 week moving average, an average it has been below since Nov. 2007! Let's see if it can move away from the 14.80 level that has held it down for the last 4 weeks.
IBB (Biotechnology) After a big up day Thursday, Friday was a rest. A move over 120.10 takes out an important trend line from the February 2012. A close above this trend line should grab the attention of swing traders.
SMH* (Semiconductors) Stopped dead in its attempt to break above its 20 DMA. The Q's have managed fine without any leadership from SMH thus far, however a rollover in SMH from this level may be an important warning sign for the bulls. On the other hand, if the SMH stocks can move higher they have the consolidation for a good move that would easily support continued outperformance by the Q's. Friday's range may be pivotal.
IYT (Transportation) Remains in a weak warning phase until it clears or fails from the 50 DMA. Friday's doji with a high at the 50 DMA and the trend line from the Feb. highs makes Friday's range a pivotal day for the next swing's direction.
IYR (Real Estate) Very tightly compressed. With the exception of six pennies on Wednesday, this has traded for 11 days within the range of Feb 23rd. Since it didn't breakdown with the rest of the market early this week, it's a good candidate for a sizable move higher if it breaks over 61.
USO (United States Oil Fund) 41.32 is an important resistance level and for all intents and purposes is held it down on Friday. A break above Friday's high creates a good path to a target of 42.
TBT (Ultrashort Lehman 20+ Year Treasuries) Late day weakness turned a strong day into a possible reversal from near the top end of the daily range. It's back into the sloppy middle of the range so it should find support above 19.20, but it would be best for the bulls for it to happen Monday or it will look heavy again. Regardless, the big picture still looks like a bottom.
Longs: After three strong days last week don't get complacent. As my analysis of the indexes above states, there are some clear levels that could indicate market weakness. Additionally, many longs are counting on breaking out to new YTD highs. The best strategy is likely an early 5-min. OR breakouts or wait for the OR reversals.
HLF Big daily breakout Friday. If an OR reversal lines up near 68 this would be a good spot to get in if you missed it Friday. Day to Swing
IMAX Consolidated on Friday on extremely light volume. Pivots are still positive and R1 and S1 are very close to Fridays range levels so a trade with the stop below Friday's low or even more conservatively below 25.50 is a good one. If you are looking for a longer term swing, you can look at 30 as your target and last week's low as your stop. Day to Swing
REGN Very tight inside day on Friday leaving the last 3 days of trading within last Tuesday's range. Considering this was trading up to 116.93 in mid-February, it has potential to at least match those highs. Day to Short-term Swing
JPM May already be long from Friday's entry, but if not this is a good candidate for an OR Reversal anywhere over S1. Day to Mini-Swing
GS An inside day on Friday, completes two days of low volume consolidation at a key level. It must hold 116 and the key levels to break on the upside are 118.50 then 118.68. 130 is a reasonable target for a swing trade. Day to Swing
CSTR The pivots are slightly negative so only trade it if it's over 61.50. Its inside day, and tight, low volume 5-day consolidation have it set up for a run if it moves higher. Key levels to clear are Friday's high of 62.06, the outside day high of 62.39 and then the 52-week high of 62.79. This can be quite volatile so trade carefully. Day to Swing
Honorable mentions include mostly stocks we already have positions in and have taken ½ ATR of profit, but are still in a position for potential new entries: IYR, LNKD (only took out prior high by a few cents, otherwise an inside day), AMGN, TWC, IBM, CRM, SMH, GLD, TSLA.
Shorts:
If the market continues its relentless move higher the shorts should be put on hold, but if market conditions are flat or weak these stocks may continue their weakness.
GOOG Extremely weak Friday on good volume and fell to its lowest close in a month after an attempt to recover its bullish phase. It is now sitting right at the big round 600 price level that could provide some support, then 597.73 and 593.83 could slow it down, but the 200 DMA is the big target around 573. Mini-swing to Swing
OPEN Pivots are slightly positive, but it closed below the FTP of 43.24 and Friday's action was in line with the daily trend - very heavy. Look for opportunities under the FTP. Expect the 42.60 level to be significant as it has been in 2 of the last 3 days. 40 is a good target. Day to Swing
ABX Pivots are negative, S1 lines up with Friday's high and there are now 4 days of consolidation, the low of which is a big daily support level that could break (45.00). 43 is a good target. Day to Swing
HCP Big volume inside day. Must be below Friday's high (39.27). There is major support around 38.84 - 38.72, but the action suggests it could break which would create a clear shot to the 38 - 37.75 area. Mini-Swing.
Monday the real-time alerts will come from the Opening Range trading room again. Mish will do the Eve Watch on Monday night and be tweeting on Tuesday.
Have a nice Sunday!
