Clearing Out The Resistance

After the SP500 has moved back above the 1322, it appears to be clearing out the resistance near 1339. When the SP500 breaks above the February 2011 high of 1344.07, the next likely major target level for the SP500 will be near the 1430 region.

The 1430 level is from a confluence of the measured move from price patterns and the 2008 high. The SP500 price chart below highlight the various price patterns that created a confluence of targets near the 1430 region. The black baseline is the 5/19/2008 closing high of 1426.63. The red lines depict the cup & handle price pattern formed between April and December of 2010 with a measured move of 1428.69. The blue lines illustrate the recent inverted head & shoulder price pattern with a projected measured move of 1429.97.

SP500:




I will continue to focus on the longs until the market tell me otherwise.

Getting Ready To Move

This post from 4/7/2011 identified some key support levels to monitor when a pullback occurs. From this week’s price actions, it appears the market did what it has indicated it might do.

The SP500 appears to have completed its pull back by dipping down to test the level near 1300. It has moved back above the 20 EMA and 50 SMA after it has dipped down to 1302 on an intraday basis. When the SP500 breaks above the 1322 level, which could be the signal it is ready to move to a new high above 1344.









The picture for the Nasdaq 100 is slightly different from the SP500. The Nasdaq 100 is still being drag down by AAPL and GOOG. Next week AAPL will be reporting its earnings, and that will probably create some volatility to pull the Nasdaq 100 down to the 2270 region. The semiconductor sector that has been contributing to the weakness in the Nasdaq 100 has turned to mixed. This could also be a sign that the Nasdaq 100 is also getting ready to move to higher level soon.









Although things are looking a bit more positive, but key support levels still need to be watched carefully in case some unexpected event or earnings surprises shake the market one more time before it resume its ascend. While waiting for the market to firm up once again toward the upside, I won’t be shorting this market. Instead, I will start identifying potential longs for the next up move.

JPM - Swing Long Exit (4/11/2011)

The swing long trade on JPM initiated on 3/29/2011 was closed out today. Click on this link to read the entire trade.

Things To Watch

Until the end of QE2, the market will continue to move higher. Although the recent price actions showing the market is stalling (potential pull back), but the trend remain to be up. The things to watch as the market make its next move to higher level are the continuation of rising commodities prices due to weakening US dollar. And for the market to mount a rally with conviction, the financial and the tech sector will need to participate.

The ETFs to watch are MOO (commodities), GLD (gold), TBF (short US Treasury), UUP (US dollar), XLF (financial), and SMH (semiconductor). The weekly price chart for XLF show it is forming a cup and handle price pattern, while the weekly price chart for the semiconductor sector ETF, SMH show it is working on its weekly bull flag move.


GLD (gold):




MOO (commodities):




UUP (US dollar):




TBF (20+ yrs US Treas. Short):




XLF (financial):




SMH (semiconductor):

Pullback Coming?

With the federal budget battle continuing and a potential government shut down, traders will most likely lighten up their positions going into the weekend to avoid potential ambush on Monday.

Here are some hourly intraday price charts highlighting some possible near term support levels for the SP500, Nasdaq 100 and the DJIA if a pullback occurs. Until some major support is broken or a climatic top has been formed, the intermediate trend remains to be up.

Note: The moving averages on the chart are 5 days SMA & 5 days EMA. Notice how they are flatten out and appear to be rolling over with prices moving beneath them.


SP500 hourly:




Nasdaq 100 hourly:




DJIA hourly:

JPM - Swing Long Update (4/7/2011)

Click here to see the latest update.

JPM - Swing Long Update (4/6/2011)

Stop has been moved to breakeven. See original post for updates.

A Look At The Big Picture

The market appears to have developed some divergence and seems to be sending out mix messages. But looking at a longer time frame price chart, the market message continues to be bullish.

The following weekly price chart for various market indices give a good look at the big picture. The bullish message is emanating from the Dow Jones Transportation and the Russell 2000. The Russell 2000 is only 9 points from its all time closing high and less than 10 points from its all time high. Even with the recent rise in crude oil prices, the Dow Jones Transportation index is getting close to its 2007 high. All these are signs of a higher high for the Dow Jones Industrials, SP500, and the Nasdaq 100.

By no means that there isn’t any short term weakness to be on the lookout for. One obvious weakness is in the tech heavy Nasdaq 100. The Nasdaq 100 is being dragged down by the weakness in the semiconductor sector and the price action of AAPL. While these weaknesses being resolve, I remain to be bullish.

Russell 2000:






Dow Jones Transportation:



SP500:






Nasdaq 100:






DJI:



NYA: