THE BOTTOM LINE -
Usually, those with a technical bent such as this writer, think they know what is happening - but hey, we're stymied too! That is because the patterns, both with Nasdaq and S&P, form triangles composed of downward and upsloping trendlines that haven't resolved themselves by a breakout either way.
Usually, faced with an uncertain picture, I give the benefit of the doubt to the dominant longer-term trend, which is up. But, it remains to be seen if the trend can reassert itself anytime soon.
The back and forth movement makes it tough to make money (in long calls or puts anyway) unless you catch some of these shorter price swings we're seeing. Right now, up against the trendlines - see details further on - I would again favor puts if I had to pick a side. And, with the market spooked - does this ever change!? - by the prospect of higher interest rates, well there's a bear thought for you.
FRIDAY'S TRADING ACTIVITY -
The S&P 500 (SPX) was up a scant tenth of 1 percent at 1,140.60 by the close and a half of a percent for the week. The Dow 30 - the new rejuvenated Dow average (adding AIG, PFE and VZ this month) was ahead by about 12 points to 10,472. Only up .02% for the week.
The Nasdaq Composite (COMP) was the bigger winner, ahead by nearly 18 points (+.08%) to 2050. The tech-heavy Index was up nearly 3% for the past week. As noted in the media on Friday, both Indices are not up on the year. Don't spend the money yet however!
Winners: retailers, semiconductors and software sectors on Friday led by Microsoft and Intel. Telecom, Internet stocks, airlines and energy sectors didn't fare so well.
Orders for new durable goods to U.S. factories jumped 3.4 percent in March, far ahead of the average 1 percent gain expected by the Street. The strength in the economy suggested by this latest reading and data met with a good news/bad news response from traders and investors. The tug is between the good news of a strong and strengthening U.S. economy and the negative view that the Market takes about the prospect this bring for higher (interest) rates.
TECH HECK -
Their revenues jumped 17% on the back of strong PC sales and broad strength in earnings from its other business groups. The analysis I saw was that going into Q4, an outlook for double digit sales growth based on new products and better IT spending.
Back at the ranch however - Amazon.com (AMZN) fell nearly 7% at one point on Street concerns over its future growth prospects - this after Q1 earnings that were well above expectations. Hey, those analysts don't like to be WRONG for LONG.
OTHER MARKETS -
The 10-year T Note was off 18/32 to 96 13/32, to yield 4.46%.
MY INDEX OUTLOOKS -
S&P 500 Index (SPX) - Daily chart: The up and down sloping trendlines form something referred to as a symmetrical triangle - all it means is that the price action is typical of a back and forth movement ahead of a next significant move. The direction of the move, above or below the trendlines will then resolve the trend. Either the S&P is back into its uptrend and goes on to make a new high or there is a new down leg. Either way its pretty clear I think - an upside penetration above the red down arrow (around 1142) AND a move above the cluster of prior highs at 1148-1150. If that happens upside potential looks to be to 1160 (prior peak) or to the 1170 at the upper envelope line that has tended to contain many of the prior rallies.
Conversely, on the downside, I consider it key for the S&P 500 (SPX) to hold the green arrow area below at 1105, with leeway to 1100.
Call to put volume ratios for Equities are not at an extreme - the last extreme being bearish. More downside would suggest that the put volume would pick up and we might then see a bullish reading. The bulls want to take charge but don't find enough good reasons yet to keep throwing money at stocks.
S&P 100 Index (OEX) - Daily chart:
OEX is getting down toward an oversold stochastic reading but is not there yet. Stay tuned.
S&P 100 Index (OEX) - Hourly chart:
Dow Industrials (INDU) Daily:
Pretty neutral on the RSI here at mid-range. The trendlines are key to assessing the next direction for the intermediate term trend. The chart suggests more of a sideways to lower direction. If so, good to be a (option) premium seller than buyer.
Nasdaq Composite (COMPX) Index - Daily:
Nasdaq Composite (COMPX) Index - Weekly:
The Composite Index could fall some distance before getting to an oversold level again - it may not, but a continued sideways to lower move will, over time, a least put the 13-week RSI closer to an oversold reading.
Nasdaq 100 (NDX) Index - Daily:
1440 is near support, at the last (down) swing low. 1400-1405 is key, and major, support I think at this point.
Nasdaq 100 tracking Stock (AMEX:QQQ)- Hourly:
NOTE: I will be doing the Index Wrap comments this coming week, taking over for Jeff (Bailey), who is taking a well-deserved break from constant battle on the front lines.
Good Trading Success!