- Hard to get market news Friday, but there is some.
- Step 2 in place: DJ30, SP500, NASDAQ and SOX hold key support with a bounce. Step 3 make the bounce stick. Step 4 extend the bounce.
- Japan apparently gets the okay to devalue, along with everyone else.
- Earnings better on Friday, woeful overall.
- Bounce has started on key indices and now we see if they can carry it through.
Market focused on other events but does what it needs to do, again.
It was rather hard to get financial news even on the financial stations Friday with non-stop (unending?) covering of the house to house hunt for the remaining Boston bomber. I thought that is why they had sports channels, financial channels, weather channels, movie channels, etc. Oh well, don't want to upset anyone and let's face it, the anchors on the financial stations were news rejects for the most part with their unrequited desires to be newsmen and women. Thus anytime they can change the subject, they do.
Several things were accomplished Friday. The second bomber was apprehended. The stock indices, after holding at key support Thursday, bounced off that support Friday. Even the Dow, weighed down by a rare and thus noteworthy earnings miss from IBM, managed a modest 10 point gain. Would have been 125 without IBM, so that shows that despite some specific earnings stories, stocks were in the mood to bounce off support.
They did bounce and thus accomplished Step 2 in our market watch. Step 1 was holding the support. Done on Thursday. Step 2 was bouncing off support. Done Friday. Now the next steps: holding the move and then extending it back up to the upper channel line.
It is that simple. As a result, there won't be much to say in this summary. That is likely a good thing because I used up what little wit and humor I have available in adding some 'color' to the plays that we compiled for the start of next week.
SP500 13.64, 0.88%
NASDAQ 39.70, 1.25%
DJ30 10.37, 0.07%
NASDAQ held its 2011 trendline and bounced on rising, average volume. Given it was expiration, the volume is suspect, but we will take it. SP500 held the 50 day EMA Thursday and bounced Friday. The Dow held its November trendline and showed a good doji, not bad given IBM's drag. SOX tapped the lows in its range and reversed for a solid gain.
All did what they had to do to keep the groundwork for a new rally in this run alive. The next question is whether they can make the move stick and keep it going. With the damage done on even those indices above that held key levels, e.g. NASDAQ and SP500, that is a key step and Friday didn't answer it. Friday just set the stage for the next step. Still has to deliver.
Dollar: 1.3072 versus 1.3057 euro. Lost some ground on the session after a big Wednesday surge off the 50 day EMA. Japan came out and said that the G20 had no words of condemnation or for that matter any words regarding its massive currency devaluation. I suppose since everyone is doing it the central bankers feel there is no harm, no foul if we all go down in a deflationary spiral.
Bonds: 1.71% versus 1.69% versus 1.70% versus 1.72% versus 1.69% versus 1.72% versus 1.79% versus 1.81% 10 year Treasury. Backed off some after a strong Monday move through the 200 day SMA. Held that move to close out the week as treasuries found their place last week as a refuge once more.
Oil: 88.01, +0.28. After a tail kicking, oil found support Tuesday and held it all week. Of course it was unable to mount a serious recovery as the international economic data continued to stink, US as well.
Gold: 1395.90, +3.40. After imploding on Monday gold pushed back a bit with modest gains through Friday. Not nearly enough strength to change the two ugly selling days, merely a relief bounce at this point, prompting many to continue their talk of deflation, or as the Fed speakers on the week said, disinflation. After all, there is no deflation in the Fed's vocabulary.
Earnings show a lagging economy.
It is not only IBM's plunge on a rare top and bottom line miss that suggests issues with earnings season. It is the numbers overall.
91 of the SP500 have reported. Still a long way to go, but thus far they are going to need a comeback.
37% have beat expectations versus quarterly average of 47%.
13% have missed expectations.
21% beating versus 37% average
24% missing versus average of 18% missing revenues.
Stats: +39.7 points (+1.25%) to close at 3206.06
Volume: 1.717B (-1.49%)
Up Volume: 1.22B (+779.84M)
Down Volume: 517.13M (-792.87M)
A/D and Hi/Lo: Advancers led 2.11 to 1
Previous Session: Decliners led 1.6 to 1
New Highs: 62 (+26)
New Lows: 45 (-22)
Stats: +13.64 points (+0.88%) to close at 1555.25
NYSE Volume: 808M (+11.45%)
A/D and Hi/Lo: Advancers led 2.66 to 1
Previous Session: Decliners led 1.25 to 1
New Highs: 226 (+57)
New Lows: 115 (-232)
Stats: +10.37 points (+0.07%) to close at 14547.51
BREADTH: More interesting at 2:1 NASDAQ and 2.6:1 NYSE. Not huge, but fitting the move.
VOLUME: Expiration saw volumes mixed on NASDAQ (-1.5%) and up on NYSE (+11%).
SP500. Sold through the November trendline Wednesday, held the 50 day EMA Thursday, bounced Friday. Steps 1 and 2 in place. Now it has to show us what is left in the upside gas tank.
NASDAQ. Broke the 50 day EMA Wednesday, held the 2011 trendline Thursday, rebounded Friday. Held and bounced where it had to. Now can GOOG, MSFT and company lead a recovery beyond the bounce?
DJ30. Good action, holding the trendline with a doji on volume (thanks to IBM). In position to make the bounce and now we see if it can.
SP400. Broke back up through the 50 day EMA in a solid move but hardly definitive. Midcaps continue to lag and look weak in their pattern. Not the focus of the bounce but worth watching if they don't follow.
Russell 2000 small caps. Bounced as well, using the late February low as support. As with the midcaps, not looking for the RUTX to provide leadership, just watching to see if they follow.
SOX. Reached lower, held support, reversed to the upside. Good action in the range, setting itself in position to make a bounce higher.
SUMMARY: DJ30, SP500, SOX, and NASDAQ all held where they had to and then bounced Friday. Now can they hold it and extend the move.
Big Names. AMZN looks ready to roll back up. GOOG helped lead higher after earnings. MSFT added to the upside as well.
Financial. Overall weak as BAC, JPM, WFC struggled.
Drugs. Good Friday as most bounced, e.g. CELG, AMGN, CLDX, ARRY. Solid moves from a leadership group.
Retail. Mixed but solid overall. DECK still solid. ROST ready to break higher as is KIRK. CONN in great position along with PSMT.
Industrials, commodities, machinery, materials all continued to struggle.
VIX: 14.97; -2.59
VXN: 17.17; -1.58
VXO: 14.27; -2.1
Put/Call Ratio (CBOE): 1.1; -0.08
Bulls versus Bears
Bulls faded significantly below 50 but bears were unconvinced, holding at 20.6%. Bears remain low, bulls not too high.
Bulls: 47.4% versus 50.5% versus 52.0% versus 49.5% versus 47.4% versus 50.00% versus 44.2% versus 46.3% versus 48.4% versus 52.6% versus 54.7% versus 54.3% versus 53.2% versus 51.1% versus 47.8% versus 46.8% versus 45.7% versus 43.6% versus 39.3% versus 37.2% versus 38.3% versus 43.6. Has hit a soft patch. Higher then rolling over below the January and February highs. That market hiccup ahead of and to the Jobs Report. Now back up so . . . probably hangs over 50. Background: Undercut 35%, the threshold for bullishness, in early June. As noted, hit 34% in early June. It did its job and the market is on the rally. Hard drop to 34 from 39.3% as economic reality and a choppy stock market hit. Off the 55+ level hit in late February. That was the highest level since April and May of 2011, the peak of the post-bear market high. 35% is the threshold level suggesting bullishness. To be seriously bearish it needs to get up to the 60% to 65% level.
Bears: 20.6% versus 20.6% versus 19.4% versus 19.6% versus 18.6% versus 18.8% versus 21.1% versus 21.1% versus 22.1% versus 21.1% versus 21.1% versus 22.3% versus 22.3% versus 23.4% versus 24.5% versus 24.5% versus 23.4% versus 25.5% versus 27.7% versus 27.7% versus 28.7% versus 27.7%. Summary: Over 35% is the threshold to be really be a good upside indicator. For reference, bearishness hit a 5 year high at 54.4% the last week of October 2008. The move over 50 took bearish sentiment to its highest level since 1995. Extreme negative sentiment. Prior levels for comparison: Bearishness peaked at 37.4% in September 2007. It topped the June 2006 peak (36%) on that run. That June peak eclipsed the March 2006 high (33%) and well above the 2005 highs that spawned new rallies (30% in May 2005, 29.2% in October 2005). That was a huge turn, unlike any seen in recent history.
Earnings season takes full flight with the bulk of earnings to come this week. That means a lot of dodging and weaving as the market weathers the thus far higher level of misses, but there are some groups that continue to look very good, e.g. drugs/healthcare, retail, and even some semiconductors.
Earnings will give some guidance, but thus far the indices have held where they needed to even with overall weaker results. Just getting started, however, and that is subject to those midcourse corrections during the season.
The key remains the same: Held support, bounced from support, now can they hold it and extend the move yet again?
Our plays focus on catching the solid sectors with solid stocks that used the recent pullback to their advantage. Again, no issues putting money into the winners . . . as long as the indices can hold their recovery off support and the extend it. Of course if they do, the leaders will be moving as well.
May sound overly simple, but that is the nature of this market right now. There is Fed talk, there is government talk about currencies, there is geopolitical tension, worries of deflation/disinflation . . . basically a petri dish of issues. The overriding factor for the stock market remains, given the absence of any good economic recovery, liquidity. Nothing at this juncture but a change in the Fed's beliefs on Keynesian stimulus would call for removing stimulus.
Support and resistance
NASDAQ: Closed at 3206.06
The 50 day EMA at 3209
3227 is the April 2000 intraday low
3255 is the November 2012 up trendline
3321 from April 2000
3377 is the upper channel line for the November 2012 to present uptrend
3401 is the May 2000 closing low
3197 is the September 2012 post-bear market high
3171 is the October intraday high
The 2011 up trendline at 3169
3134 is the March 2012 post-bear market peak
3130 from some January 2013 lows
3104-3112 from August and mid-October peaks.
3101 is the August 2012 high
3090 is the mid-March interim high
The 200 day SMA at 3080
3076 is the late April 2012 high and the 1/2013 low after gapping higher
3062 is the December 2012 prior peak
3042 from 5/2000 low and several other price points
3024 is the gap point from early May
3000 is the February 2012 post-bear market high
2999 is the bottom of the August 2012 consolidation
2988 is the July 2012 high
2977 to 2980 is the bottom of the late October 2012 consolidation, July 2012 peak
2962 is the April 2012 low
2950 is the mid-April closing low
2942 is the mid-June 2012 high
2900 is the March 2012 intraday low
2858 is the late July 2011 peak
2847 is the mid-May 2012 low
2838 from the July 2012 lows
S&P 500: Closed at 1555.25
1556 from July 2007
The November up trendline at 1560
1576 from October 2007, the prior all-time high
1598 is the April 2013 high and all-time high
1625 is the upper trendline in the channel
The 50 day EMA at 1542
1539 from June 2007
1531 is the recent high
1499 from January 2008
1475 is the September 2012 high
1471 is the October 2012 intraday high
1466 is the September 2012 closing peak and rally closing high
The 200 day SMA at 1453
1440 from November 2007 closing lows
1434 from early November 2012
1433 from August 2007 closing lows
1427 is the August 2012 peak
1425 from May 2008 closing highs and the October 2012 low
1408 is the late October 2012 range closing low
1406 is the early May 2012 peak
1402.22 - 1400 is the closing low of the August 2012 lateral consolidation
1378 is the February 2012 peak
1375 is the early July 2012 peak
1371 is the May 2011 peak, the post-bear market high
1363.46 is June 2012 high
1359 is the April 2012 low
1357 is the July 2011 peak
1344 is the February 2011 peak
1340 is the early April 2011 peak
1332 is the early March 2011 peak
Dow: Closed at 14,547.51
15,052 is the upper channel line for the trend off the November low.
9.0% above its 200 day SMA, still leaving DJ30 room to run before it gets too top heavy on this run and has to test.
The November up trendline at 14,482
The 50 day EMA at 14,359
14,198 from the October 2007 high
14,149 is the February 2013 high
14,022 from 7-07 peak
14,010 from the early February 2013 consolidation
13,784 is the late February 2013 closing low
13,692 from 6-2007 peak
13,668 from 12-2007 peak
13662 is the October 2012 intraday high
13,653 is the September 2012 high
13,557 to 13,662
The 200 day SMA at 13,502
13,413 from the late September 2012 low
13,300 to 13,331 is the August 2012 post-bear market high
13,297 is the April 2012, prior post bear market high
13,058 from the May 2008 peak on that bounce in the selling
13,056 is the February 2012 high
12,716 is the April 2012 closing low
12,524 is a range of support from early 2012 and summertime 2012
April 22 - Monday
Existing Home Sales, March (10:00): 5.01M expected, 4.98M prior
April 23 - Tuesday
FHFA Housing Price I, February (9:00): 0.6% prior
New Home Sales, March (10:00): 415K expected, 411K prior
April 24 - Wednesday
MBA Mortgage Index, 04/20 (7:00): 4.8% prior
Durable Orders, March (8:30): -3.1% expected, 5.6% prior (revised from 5.7%)
Durable Goods -ex transports, March (8:30): 0.0% expected, -0.7% prior (revised from -0.5%)
Crude Inventories, 04/20 (10:30): -1.233M prior
April 25 - Thursday
Initial Claims, 04/20 (8:30): 351K expected, 352K prior
Continuing Claims, 04/13 (8:30): 3060K expected, 3068K prior
Natural Gas Inventories, 04/20 (10:30): 31 bcf prior
April 26 - Friday
GDP-Adv., Q1 (8:30): 2.8% expected, 0.4% prior
Chain Deflator-Adv., Q1 (8:30): 1.6% expected, 1.0% prior
Michigan Sentiment - Final, April (9:55): 72.4 expected, 72.3 prior
By: Jon Johnson, Editor
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