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Market Updates

Question on Wal-Mart

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This morning, shares of Wal-Mart Stores (NYSE:WMT) gapped higher to open trading at $53.30 and currently trade $53.33. PremierMarkets.com profiled shares of WMT as a bullish trade on April 24th, but we were taking a "longer-term" approach to the stock and thought the June 50 calls (WMTFJ) would be attractive if the stock were able to achieve a bullish price objective of $61 from the point/figure charts current vertical count. I don't necessarily think that shares of WMT will trade $61 before June expiration, but the earliest exit I'd be looking at would be the $54.71 level or 61.8% retracement from the July 10, 2000 high of $62.93 and the October 12, 2000 low of $41.43. Long-term downward trend near $55.75 may be formidable for June expiration.

Wal-Mart Chart - last eleven months

Today's open would be a nice short-term traders gain and I don't think it is out of the question to sell May options here. However, PremierMarkets.com promised we'd look long this stock and follow it for a period of time and since it hasn't achieved at leas one level of resistance on our charts, we're going to continue to follow the stock and the June 50 calls (WMTFJ). Support should now be firming at 50% retracement at $52.18.

Semiconductor HOLDRs Update

More e-mail from subscribers on PremierMarkets.com is how to manage their trade in the Semiconductor HOLDRs profiled short from yesterday at $50. Currently, I'd say there has been little activity in this trade. The gap up this morning was met by selling, but I feel that the $48.33 level really needs to be broken to the downside before we can call this trade a success. We were not looking for a home run when we initiated this trade, but the technicals suggest that this group could see a pullback.

Semiconductor HOLDRs Chart - 60-minute interval

A rolling 50-period MA and 61.8% retracement acting like resistance lately had us thinking that there were some sellers between $50 and $51.52 in this security and perhaps the broader semiconductor sector. A break below $48.33 should have market participants getting more aggressive with their selling and we look to take advantage of that selling before it occurred. A bearish trader would then look to lock in gains from a bearish trade at or near a rising 200-pd MA on the above chart. At the time we profiled the trade, that was at $45.85. If we're wrong, we'll admit our mistake with a stop at $51.65, just above 61.8% retracement.

Why couldn't the Dow Industrials trade 11,000?

When I looked at the Dow Industrials components earlier today, I noticed that Intel (NASDAQ:INTC) was down and weighing on the Dow. Hey... INTC is a semiconductor stock. INTC is also a NASDAQ stock and has a big weighting in the QQQs.

Jeff Bailey
Senior Market Technician
www.PremierMarkets.com

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