Archive for June, 2012

Summer Rally Stalled?

At this time, the June S&P 500 Index futures have rebounded from the June 4th low of 1255.50 to 1357 (just above the May 11th high of 1356.75).  Easily surpassing the 50% retracement level (1335) from the March 26th high of 1413.25.

Now the index, as well as several of its key components, has run into some major resistance and has formed some double tops that often indicate a change in trend.  After making the 1357 high on Tuesday, the index stalled at 1355.50 on Wednesday and has yet to reach that level today.  Furthermore, two consecutive closes around 1350 adds further significance to this entire area.

Apple (NASDAQ:AAPL) has rallied over 60 points from its 528.66 low to 590 on Tuesday.  Sellers stepped down a bit on Wednesday and the rally was halted at 589.25.  For AAPL to make an assault on the psychological resistance at 600, AAPL must maintain its close above 586.33, which earmarks the 50% retracement of the move from its 644 high in April.  Has the retail crowd as well as the big boys vowed to exit this issue around 600 before its next quarter’s earnings, which were already lowered by the company itself?

International Business Machines (NYSE:IBM) has met similar resistance at the nice round number of 200.  As of today, two attempts to penetrate that level have failed.  IBM is struggling to close above 198.85 which earmarks the 50% retracement from the 210.69 high to the 187 low.  On the downside, 197.27 has halted any declines from the 200 area, so that would be the key level to exit IBM on weakness.

The level to focus on for Microsoft (NASDAQ:MSFT) is 31.  Today, MSFT cracked the double top at 31.05 and 31.11, but not by much (31.14) and retreated.  Has the euphoria from the new tablet announcement faded and is the rally over?  A decline under 30.63 (50% retracement from 32.95 to 28.32) would provide enough confirmation for me.

General Electric (NYSE:GE) had a nice rally from 18.05 to 20.15, just ahead of its ex-dividend date today.  Perhaps investors were in this issue to capture the dividend and now plan to exit with the dividend and some capital appreciation to boot.  GE needs to get back above 20 and crack the double top at 20.14-20.15 to avoid a slide back down to 19.

Chevron Corporation (NYSE:CVX) has formed a triple top around 104.50.  This is slightly above the 50% retracement level (104) from 112.28 to the low of 95.73.  Now those who did not exit CVX on strength will be faced with the difficult task of exiting this issue on a decline, which is extremely difficult with the wide spreads and miniscule bids.  If you are looking to exit CVX on weakness, a move below 102 could easily cascade into a decline to the major support under 100.

Exxon-Mobil (NYSE:XOM) had fared much better than CVX over the last few days.  Although if today’s high holds, there will be a double top at 85.37-85.39.  With the 50% retracement (82.54) from the 87.94 high to 77.13 low being a few points away, locking in some profits on XOM may be prudent.

AT&T’s (NYSE:T) monster run from 31 has finally been halted.  The large sellers at 36 have finally got it right after several attempts to halt the stock at 34 and 35.  There is nothing but air in this stock under 35.  Therefore, its hard fought gains from 31 back in April can be taken away in a matter of days.  High expectations have been built into this stock price, so they must not disappoint next quarter.

What can you say about Johnson&Johnson (NYSE:JNJ) and its unprecedented move from just under 62?  How about time to take some profits?  At this time, the large sellers at 67 have capped the rally, and even if its clears that level, I would expect more large sellers.  All the stock needs is another Tylenol recall or failed drug trial and all those gains could evaporate in a heartbeat.

Wells Fargo (NYSE:WFC) is hanging in there as well.  However, a triple top has formed from 33.14-33.26, but the decline has been muted.  For this issue, I would pay close attention to a close below 32.50, which was a major area of support back in April.

Procter&Gamble (NYSE:PG) has not joined the party and for good reason.  After poor earnings last quarter which ignited a selloff, the company has warned the next quarter will not be any better.  The best investors can hope for is some consolidation around 60 and an attempt to fill the gap from yesterday up to 62.10.

In closing, I wish I had written this article yesterday as the market has significantly sold off from the aforementioned levels.  However, the way this market grinds, there is a good chance that you may get another look at these resistance levels.  And at that time, you can decide whether there will be triple and quadruple tops or if there is truly a summer rally on the horizon.

June 21 – Premarket Stock Talk

Another retailer takes a plunge, less people smoking, and two biotechs take opposite directions in their cancer drugs.  Full premarket analysis:

June 20th Premarket Stock Talk

PG lowers guidance.  ADBE and JBL report, and IBM and PEP run into HFT sellers.  Full premarket analysis:

June 19th Premarket Stock Talk

ORCL surprises us with earnings last night. WAG tries to write a prescription for a higher stock price, and FDX a little light with next quarter’s deliveries.  Full Premarket Analysis:

June 19th Premarket Movers

Stock Movement Reason Our Comments
ORCL Up 1 point. Earnings last night. Stock traded up significantly last night after releasing earnings 3 days early.  28 could be a key swing number. 
WAG Up 70 cents. Earnings, raise dividend, acquires 45% stake in Alliance Boots. A plethora of news. Stock rallying nicely. Traded as high as 33.25 in premarket. 34 may provide major resistance. 
JCP Down $1.50 President leaving. Another JCP exec. jumps ship.  Stock making new 52 week lows this morning.  Keep an eye on old 52 week low of 23.14. 
FDX Down 1 point. Earnings, lowers guidance. Stock beats on earnings, but estimates for next quarter a   little bit light.  Traded as low as 84.01 in premarket. Bouncing back now. 
MSFT Up 30 cents. Announces new tablet. Unveils new tablet, Surface.  30 number continues to act like a magnet, needs to hold that critical number. 
* Listen to Premarket Stock Talk at 8:45 ET for full premarket coverage.

 

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