Compared to Friday's trade, today's Yom Kippur holiday found the major indices creeping higher on light volume, where gains for the major indices were really a recouping of Friday's last hour pullback.
All eyes are on the highs and bears look jittery where economic news early this week is August related and it won't be until Thursday that weekly jobless claims and September import/export data give traders fresh economic data to trade on and after breaking above their MONTHLY Pivots last week, the major indices now sit on MONTHLY R1's as near-term support, with new 52-week highs in reach.
Pivot Matrix -
I would have to view the MONTHLY pivots as formidable support the remainder of the month. The main reason for this thinking is the rather impressive move higher from the found from the major indices, where we first witness the Dow Industrials, SPX and OEX making the breaks higher, as well as last Thursday's jump higher from the MONTHLY Pivot in the QQQ after Friday morning's nonfarm payroll data.
Levels that I would deem more significant on a swing trade basis is that I feel the major indices as it relates to the SPX would have near-term upside to its WEEKLY R1, but with Stochastics now "overbought," it would not be unlikely to see some giveback of those types of gains to the WEEKLY Pivots, where I would currently look to protect gains with bullish stops just under tomorrow's correlative MONTHLY R1's and DAILY S1/S2 correlative levels.
S&P 500 Index Chart - Daily Interval
The SPX may be finding some near-term resistance at our cloned downward trend, but bulls that traded long above the MONTHLY Pivot at 1,010 should feel comfortable (no complacent) with a stop just under MONTHLY R1 of 1,025, which was quickly discussed as a bullish stop in Friday morning's 09:00 AM EDT intra-day update. Late Thursday, in the final hour of trade, the SPX intra-day chart showed the SPX declining to 1,029.15. I like the idea of a 1,025 stop, as that would most likely protect a bull's gains and a turn lower from "overbought."
Today's trade saw no net change in the broader S&P 500 Bullish % ($BPSPX), where its status remains "bull confirmed" at 77.60%.
S&P 100 Index Chart - Daily Interval
American Express (NYSE:AXP) $46.45 -0.08% was the only financial component in the OEX to find a loss by session's end, with the Broker/Dealer Index (XBD.X) 627.52 +1.85% leading financial sector gains after electronic broker Knight Trading Group (NASDAQ:NITE) $13.95 +15.28 sparked gains after the company said it would see a stronger quarter due to increasing trade volumes for equities. Last week, the S&P Banks Index (BIX.X) 315.29 +0.84% showed strength in their WEEKLY and MONTHLY pivots and look to be closing in on their 52-week highs of 317.94, which would be right at the correlative levels noted in the matrix. This BIX.X has gained just over 5% in the past three-weeks, and for the OEX to clear its WEEKLY R1, I would think the BIX.X needs to make a bold break above its WEEKLY R1, where a strong round of short-covering could see a test of WEEKLY R2 at 323 in the BIX.X.
I'm still keeping an eye on Washington Mutual (NYSE:WM) $39.85 +1.78% for strength above $40.00 and I would think an OEX/SPX index trader should keep an eye on the stock to get a feel for potential short-covering and bullishness for the stock should it be able to clear the $40.00 level.
Today's trade saw not net change in the narrower S&P 100 Bullish % ($BPOEX), which remains "bull correction" status at 78%.
Dow Industrials (INDU) Chart - Daily Interval
Aluminum maker Alcoa (NYSE:AA) $28.27 +0.42% has risen $2.46 per share, or 9.5% since it last reported quarterly earnings on July 8, when the company beat estimates by 2 cents a share, when it reported EPS of $0.27 (excluding one-time charges), and will be the first Dow component to kick off quarterly earnings after tomorrow's closing bell. AA did slip to a post quarterly earnings low of $24.00 two-weeks after it last reported earnings, and such slippage might equate to a Dow pullback to its MONTHLY pivot of 9,400 should the company not exceed current estimates for $0.30 per share, where most analysts feel higher aluminum prices should help results.
While AA carries the 23rd highest weighting in the Dow 30, its earning report and comments on the state of both the U.S. and global economic trend could set an early tone for some of this quarter's deeply rooted in the economy non-ferrous metals producers/manufacturers.
In Thursday evening's Market Monitor, I discussed a bullish trade in copper producer (non-ferrous metals sector) Phelps Dodge (NYSE:PD) $51.85 +2.04% from the $49.31 level and the stock has set two consecutive session 52-week highs, so I would think the MARKET is looking for some upside surprises, or positive news from this group of stocks.
Today's trade saw no net change in the very narrow Dow Industrials Bullish % ($BPINDU). Still "bull correction" status at 83.33%.
NASDAQ-100 Tracking Stock (AMEX:QQQ) - Daily Interval
The QQQ edged higher today and recouped Friday afternoon's pullback to now challenge Friday's highs. Shorts may be in a fix on a break above the $34.50 level as there was little volume in today's session that an overly short bear could cover into. While I've marked our cloned downward trend as a potential bullish target for a "blow off" type move on short-covering, I do think the $35.00 level is a good target for a "get out early" type of trade on strength as we see some overlap in the WEEKLY R1 and the WEEKLY retracement itself, but $35.00 is also a nice round psychological number.
I must admit that I was a bit surprised by PeopleSoft's (NASDAQ:PSFT) $20.43 +3.12% upside earnings warning as it is often very difficult to make a large acquisition like PSFT did of JD Edwards, begin integrating the two operations, and still give some hint of an upside earnings surprise.
PSFT did not say what the amount of the upside surprise was, and I can only guess, it is to help PSFT's less than friendly rival Oracle (NASDAQ:ORCL) $12.19 +1.75% and its CEO Larry Ellison lose a little sleep until PSFT reports earnings later this month. Current estimates are for PSFT to have earned $0.11 per share, where earnings for October 16th, after the market's close, has not yet been confirmed by PSFT.
Today's trade saw no net change in the NASDAQ-100 Bullish % ($BPNDX) where status remains "bear confirmed" at 73%.