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Holiday week schedule: The weekend
report on Sunday.
Here is the Deal:
After a pleasant holiday the market started
out slow, and generally chopped about as expected. Overall
there isn’t much to add as prices consolidated after a strong
first half of the week. Friday’s non-farm payroll numbers will
set the early tone for the end of the week.
GM took more than 10 out of the Dow but IBM
picked up the slack. Support at 13,520 held during a choppy
Thursday that consolidated the gains of the first half of the
week. The stage is set for an upside breakout on Friday.
13,600 is clearly an overhead resistance
level. Provided we get the right mix of data on Friday, the
resistance level should easily be overcome leading to new highs
as the Dow and S&P follow the NASD higher.
Friday’s non-Farm Payroll report will set the
early tone. I remain of the opinion the economy is strong,
meaning I expect a healthy report. As long as we don’t see
excessive wage growth the market should handle the data.
Jim
Here’s why:
After a strong two day push higher the Dow was
never really up much on the day. It was down 64 at the mid-day
lows and the day’s range was 66 points. After 9 days with an
average daily range of 165 points, the past two days of 65
point range action is reasonably constrained. The Dow closed at
13,565 down 11.
Interest rates snapped higher after
having filled the gap. The near-term rise is not a surprise,
but it was a bit larger than expected. It remains apparent that
bond traders are somewhat skittish to say the least. Thursday
bonds were remarkably weak and significantly pressed the upper
channel boundary on Thursday.
S&P reach and stalled at Fib 76%
retracement at 1526: The SPX didn’t need to do much to
suggest higher prices to come, but Thursday much of anything to
the upside was too much to ask. 1517 support was challenged and
remains a near-term focal point, but it held on Thursday. A
close below 1517 will disrupt the preferred more bullish
near-term alternative. Thursday’s price action is consistent
with our expectation for choppy action.
The Russell 2000 closed above 848 after
testing the broken trend line: The Russell put on a
good show on a generally sideways day. We are still waiting for
the real upside thrust higher, that should carry prices
significantly higher. We may have to wait until earnings for
that to really happen. Near-term, the bulls remain in the
driver’s seat.
The NASD continued higher making another new
52-week high. If the NASD is really going higher, and the Dow
and S&P are going to make new 52-week highs, then the NASD
should accelerate higher as it leads this leg of the market
higher.
A couple of the daily trends turned down on
Thursday, but with the afternoon recovery, it wasn’t anything
serious. The 3-day trends can turn up on Friday, which will
suggest additional strength to come over the week ahead.
Detailed Trend Report on Web &
CLX Count and Weekly Signal Counts &
NYSE & NASD 5-day up and down volume charts
Total breadth was -299 with the NASD showing
better numbers. Total volume was light, which was expected.
However, it was still solid to the upside.
Internally, selling pressure has contracted substantially, but
Tuesday’s half day action is a factor in that so it isn’t as
excessive as it appears.
The market is well positioned for a positive
reaction to Friday’s numbers, and that reaction should drive
the day’s action. In addition, A solid Friday will set the
stage for the rest of July, which is expected to be a good
month.
Jim Patterson
Most Obvious chart resistance levels:
()
Dow
13,480,
13,620, 13690, 13,790, 13,845, 14,350
SPX
1505,
1514,
1522, 1528, 1532, 1542,
1546, 1551 (ATH) 1562
NASD
2565, 2585, 2595, 2605, 2629,
2647, 2668,
2710-2730
NDX
1890, 1900, 1916, 1926,1934, 1940,
1957, 1961, 1972,
1982
NYSE
9850, 9910, 10,000,
10,060, 10,160
RUT-2K
826,
832, 838, 842, 848,
854-856, 867, 876
Most obvious Chart Support levels:
Dow
13,580, 13,520,
13,480, 13,350,
13,280, 13,220, 13,131, 13,050
SPX 1517,
1500, 1496,
1491, 1487, 1483, 1475, 1436, 1397, 1373, 1362, 1340
NASD
2640, 2608,
2587, 2565, 2558, 2548,
2525, 2480, 2455
NDX 1965, 1945, 1934,
1920, 1918, 1903, 1895,
1875,
1855, 1840
NYSE
10,000, 9970, 9820,
9780, 9690,
9620, 9510, 9400, 9350, 9280
RUT-2K
850, 844-846,
838, 836, 830,
820, 808- 810, 803, 790, 760
Here’s where we are now:
NASD 100 Index (NDX) Trading System,
trade the QQQQ:
After a bit of consolidation, the NDX
continued higher virtually reaching the 1982 Fibonacci target I
have been talking about for so long. Baring a negative
reaction, the trend remains higher.
S&P 500 (SPX) Trading
We went long the SSO on Wednesday 6/13 on the
back of the Rare Buy signals with an entry price of 94.42.
Entry #2 @ 93.00
The SSO closed at 96.63
We are looking for higher prices on the back
of Friday’s data.
PDA rec Long 5/14 @ 33.12, stop 37.37, target
reached with a close above 40 for a 20% gain
UNCA rec Long 5/22 @ 16.98, stop 14, target
20, closed at 15.52
DK rec long 5/31 @ 23.85, stop 24.87, Target 29, closed
at 28.83
BBD rec long 5/31 @ 25.39, stop 23, Target 28, closed at 24.67
CHINA rec long 6-14 @ 8.56, stop 8.01, closed at 9.24
New long:
SVVS rec long 6-28 @ 50.55, stop 47.75, target 59, closed at
50.45
DK traded above our target price of $29 a
21% gain.
We bought AAPL July 110 Puts @ $6.60 on 5/16
**
PRS Open Actives making noise:
Note: I am away from the office this week and do not have full
access.
Jim Patterson
Editor
Tactical Trading Outlook
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