After a big 1-day rally, what next?

Summary
S&P500: 870, 885 (S1, 23.6%), 892-4 (P, 38.2%), 900, 910 (R1, 61.8%, 50D mmv)
GS: 145, 148, 150, 151.20
JPM: 32.00, 32.75 (61.8%), 33.00 (50% is 33.12), 33.20 (S1), 33.70 (38.2%), 34.00 (23.6%), 34.50, 35.00
MS: 26.50 (38.2%), 27.00 (50%), 27.50 (61.8%), 28.00, 28.25, 28.50 (R1)
CAT: 31.00, 31.30 (23.6%, R1), 32.00 (38.2%), 32.70 (50%, R2), 33.00

Yesterday was a big day for the market - there was 35 points swing in S&P500. It bounced off 200D mmv to end the day on the high not. IMHO, looks like lot of short-covering going on given that most technical analysts have been calling for down trend to continue. The market will likely take a breather today because of (a) yesterday's big move (b) it is hitting important resistane points. Moreover, downtrend will be broken only when it breaks through 930 in a convincing manner. The key will be reaction to GS earnings news and how the market reacts to it. Most likely it might be "sell on news" day. Also June retail sales is coming out. Although that's not "new news" it still can move the market if affects the sentiment.

Financials are the way to go today. In retrospect, I should have loaded on GS when it failed to fill the gap ($45) in early morning trading yesterday esp on a bullish call from one the most bearish banking analyst. Oh well! Missed the chance but hopefully will happen again. Earnings is the key. Will be interesting to see if it will surpass the previous high 51.17 which also happens to be R1.

The earnings are out but the pre-market is pretty lackluster. The key support to 148.11 (P), 147 and 146.5 (23.6%).

JPM is hitting important resistance points. 35 is an important resistance point (top-end of daily bollinger band, 50D mmv). The key #s to watch are 34.50 and 34.30.

MS is also hitting top-end of Bollinger band as well as 50D mmv. Unlike GS and JPM, it still has room on the upside but it might be capped at 28.25. The key to watch is 27.70 and 27.50.

CAT seem to have broken the downtrend if it stays 31.30 (23.6%) but the risk is that daily chart still shows downturn.

IBM has been trending up. The key level is 103.25.

Also looking interesting are PRU and BBY which are gapping up.

Will the Financials Rule the Day?

Summary
S&P500: 868, 873, 882, 888, 892
GS: 142, 144, 145, 147, 149
JPM: 31.80, 32.00, 32.50, 32.75, 33.00, 33.50
CAT: 29.90, 30.00, 30.25, 30.50, 30.75, 31.00

This will be an interesting week for the market. Earnings news especially from financials will likely dominate the news flow. We'll see if the weekly decline will continue through this week.

S&P500 is hovering around important technical levels as bullish and bearish trends fight out. The critical 200 days moving average is 880 and we'll see if that will be broken on the upside. On the top side, 886-888 remain important levels of resistance. On the downside, if the market breaks through 873 and then 868 then it could be the beginning of a much larger retrenchment into 840s and even 820s. For NASDAQ resistance is at 1,760 and supports at 1,745 and 1,730.

Financials will be the names to trade today given the likely volatility in that sector. GS is upgraded by Meredith Whitney and is up strong in the pre-market. It will be interesting to see if it stays above $145, the highs for the past 2 days. If so, it could easily test the 147 and then 149. On the support side, there is strong support at 144 (20D & 8D mmv and R1). Another support below that is 142.

JPM does not have any particular trend although it is one of the stronger financials. The key levels to watch on the downsides are 31.80 and 32.00 and the upside 32.50 and 32.75. If it falls below 31.50, then it signals problems.

CAT looks interesting. 30 seem to be an interesting level and the stock might test that level and could go even as low as 29.80. If that breaks, the major support is at 28.5. On the upside, the reistance are at 30.25, 30.50, 30.75 and 31.00.

On the upgrade news, BBY was upgraded by Oppenheimer. There is strong support 32.5 and 32.6

Waiting for a confirmation

Today's action is likely to be important for S&P500's medium-term outlook. S&P500 broke through 200D mmv and is an important support level of 875-880. If it holds that today, which is likely given (1) positive future (2) dearth of economic/financial data. The important support areas are 874 (S1), 868 (S2) and 840 (38.2% retracement). The resistance points are 885-87 (200D mmv and P), 893 (R1) and 900.

FCX has a strong resistance at 45 despite 2 days of fall on a big volume. The next support is 44 (38.2% retracement). Looks like it is rebounding following an upgrade by Citigroup this morning. The stock is up more than 1% in pre-market. There is resistance at 45.70 and support at 45.25.

PEP also looks interesting. It is hugging the low-end of 1H Bollinger band. It has broken the up-trend when it fell below 56.08 on a strong volume and it will be interesting if 56.00 level holds up. If that does not then the target is around 55.50 (20D mmv and P&S1).

FDO came with strong earnings. This might benefit WMT which for reason has been languishing in no-man's land. In the pre-market is gapping up past 48.02 (R1) and 48.05 (previous day high). To get more excited on this stock it has to get past key resistance points 48.20 (R2 and 3 day high).

On financials, GS has support aroudn 142 but more interestingly JPM has support at 32.75 (pivot) and 32.50. The has bounced off daily Bollinger bank in the past 2 days on a relatively strong volume.

Good luck.

I am confused

It seems that the stock market is struggling to find any meaningful direction. S&P500 bounced off the critical 888 level, which also happened to be 200D mmv but it could not go past 900. Volume was strong however. We'll see if 9o0 will be broken today. Given the futures market it is likely but future has not been the best predictor for market direction. For S&P500, if it goes below 895, the hourly up-trend will be broken and it could retrace its yesterday's low. For NASDAQ it held up its 1,770 level yesterday which also happened to be 50D mmv but failed to break 1,795. The short-term spport is 1,780

Given the uncertainty in the market, the place to put bets on is defensives names. GIS is showing a strong up-trend following its earnings results on July 1st. It is over its 200D mmv but today it could re-trace 60 level (I made a bad trade yesterday). PEP also looks interesting. It might re-test 56.90.

JPM bounced off its 200D mmv on a strong volume. This is a good sign. However, there is strong resistance at 32.80, we'll have to see if it breaks it. The other critical level is 32.30 and then 32.00.

CAT is on a downtrend. It might head towards 31 but it hold 31.55, it'll be interesting.

FCX is interesting and the level to watch is 45.25.

GOOD LUCK.

Beginning of a Correction?

The market seems to be taking a pause. All the major Asian and European markets are down 1%+ for the day. The future in the US is pointing to a lower start for the day after a long July 4 weekend. This could be the beginning of some kind of correction as the most critical data (ISM and empoloyment) released late last week did not suggest a rapid recovery as the market had expected. The ISM new orders fell back below 50 and employment picture in the US s struggling to improve. Most ominously, if we get another big negative number next week we could see all the employment growth since last recession vanish. In this cirumstance, employment is NOT the lagging indicator but a leading one. Whether the current decline in market will be more sustained depends on what happens to Q2 earnings and more specifically future prospects as company start releasing them this week. Alcoa starts the unofficial earnings season on July 8 (Wednesday) which ends un-officially with Wal-Mart on August 13.

For S&P500 the critical support levels are 888 (previous low, 200D mmv) and then 880. The resistance are 896, 900 and 905. For NASDAQ the support levels are 1,780 and 1,750. The resistance levels are 1,805 and 1,820. For DJIA the support levels are 8,100 and 8,000.

BEN is upgraded by JP Morgan. The stock exhibits up-trend and we'll see if it tests 68.25 which is previous low as well as 23.8% Fib retracement. Before that it might be just 69.00.

JPM broke through an important support at 32.75 on Friday but there is a stonger support at 32.00. To make the likelihood of a rebound more likely the past 3 down days have been on a relatively weak volume. Caution is the rule of the game howeve given that both the market and the stock exhibit a strong downtrend.

GLW is approaching a critical support level is at 15.00. Given strong news from the company and its end-users (Samsung) there is likelihood that there will be buying pressure. There is however a risk that the downturn might continue given that the recent declines have occured on strong volume.

For GS and MS the critical support levels are at 139.00 and 26.00 levels. If the prices approach that level, it will be time to get in.

CAT has broken important support at 32.00. There is likelihood that it will try to go above 32 but if that fails, will see it heading towards 29-30.

Defensive names like GIS, K and PEP look interesting. All are at interesting technical levels on hourly charts.

The Third Quarter Begins

Today is the beginning of a new month and a new quarter. Following the 6 consecutive quarterly declines, S&P500 finally posted a strong rebound - from 794 to 920 or up 16%. Whether the rebound will continue is an open question but most likely it will stall and consolidate around 800-1,000 range mainly because the US economy is yet to fire on all cyclinders. Following 2001-02 bear-market S&P500 consolidated for 3 quarters before it's break-out to the upside. The current episode is much worse than 2001-02 and the likely consolidation period is more likely to be longer but there will be plenty of volatility for traders.


For S&P500, there is a fairly strong support at 910-915 and resistance at 925-30. For Nasdaq, there is support at 1,820-1,825 and resistance at 1,850-1,855. Most likely the market will be range-bound but I suspect that the risk of the ISM is to the upside and that could drive the stock market higher. I will be positioned for long in the morning session.

If the bet is that ISM will come out strong, the main beneficiaries will the capital goods. CAT was down almost 5% yesterday for no apparant reason. There is a strong resistance at 33.00 but if that breaks down there is even stronger resistance at 32.00. On the upside, we'll be looking at 33.5.

If the market is strong, GOOG might test the highs of 427-8 or it could test the lows of yesterday - it is possible that it could test 410 on the low side. Clearly it bounced of the low-end of the Bollinger band yesterday which suggest somewhat of a bullish trend but in order to negative the mixed signal from the daily chart, it has to convincingly break the 430 barrier.

GS might test the high again, around 149-50 but there is some strong resistance around 148. Will go short if it moves up too much.

End of Q2 2009

Today is the last day of the month and also the quarter. So from a technical standpoint it is an important day as institutional investors close their books. "Window dressing" trades could occur which could benefit strong stocks but given that this a well-known concept, it is likely that it has already happened. There might be few procastinators but they are not likely to move the market. The bottom-line is the people will likely not sell into this market.

The future is pointing to a slightly positive opening but that could change. Case-Shiller HPI is coming out this morning and so is Chicago PMI. The most important will be tomorrow's ISM and Thursday Employment figures.

For S&P500, the key levels to watch on the upsides are 930 and 940 and on the downsides are 925, 920, 915, 910 and 905. On the hourly chart, the S&P500 is showing an uptrend which could take it to 935-40 level and that could happen if it does not fall below 925, the 8mavg on daily chart.

Nasdaq is also trending up both on hourly and monthly charts. The key level to watch on the downside is 1,840 and 1,830. On the upside if it goes above 1,855-60 then we'll be heading towards 1,880.

In today's market I should remain strategically long unless the overall market breaks the key technical levels to downside.

APOL released its 09Q3 earnings and beat the street estimates handily. It is up almost 10% in the pre-market. If it opens above $70 and holds onto that level then it could go to $75-$80 level. There is a long-term resistance at $70.

We are seeing some muted action on DE since Goldman upgrade last Thursday. The daily chart still points to a down-side risk although a hourly-chart shows and interesting up-trend. If it hugs the $42 level on a strong volume, we could see a signficant uptrend going foward.

GS is within a shouting distance of its high ($151). We'll see if it bouches off those levels. This stock could be benefiting from the "window dressing trade".

BAC and MS are showing interesting up-trend on hourly chart. For MS the key down levels are 28.80 on the upside 29.40. For BAC the key levels are 13.00 on the low and 13.40 on the top.

FDX was upgraded by Barclay's following last week's upgrade by JP Morgan. It is up almost 2% in pre-market and if it holds 54.40, it will be a bullish trend.

MCD is up almost 1% pre-market. Not sure why. If it breaks 57.7, it'll be interesting.