Archive for September, 2012
CAT guidance confused HFT players as it was released 2 minutes before the close. Human traders could have actually beat the machines here. AAPL versus GOOG. RHT disappoints. Oil stocks forming a double top? Premarket trading analysis:
Facebook worth only 15?….Barron’s makes that argument. Homebuilders continue to show strength. Key technical levels in the S&P and its top components. Premarket trading analysis:
It is not very often that there is four consecutive closes in the S&P 500 futures all within one point. That is exactly what occurred this week as the index closed between 1453 and 1454 during the Monday, Tuesday, Wednesday, and Thursday sessions. After posting early gains on Friday, fueled by the quadruple witch expiration, the index closed just below this range at 1452. The market is trying to tell us something, but what?
Perhaps it is just another period of consolidation, similar to the activity around 1400, and another blast to the upside is on the horizon. But maybe this consolidation is the precipice for a much overdue correction. On Thursday, it appeared that the correction had begun in earnest as the index slipped under 1450 and began to enter the vacuum area that was created from the announcement of QE3. But the bulls came to the rescue as the index somehow found support at 1443.50 and mounted a rally that reached 1462.25 on Friday.
Based on the weak close from Friday, the index is poised to revisit the 1440 handle and test the validity of the 1443.50 low. If it breaches that level on its second attempt, the index may not find any major support until the low of 1428 that was made on the day of the Fed announcement. In order to reverse the decline from Friday, the index needs to get above the top of those multiple closes at 1454 and take out Friday’s high of 1462.25 early in the week.
The fundamentals in Apple (NASDAQ:AAPL) are beginning to sour, that is if you ask my wife who received her new phone on Friday, in the wrong color. I guess that’s what she gets for being unwilling to camp out in front of an Apple store, and opting to order her phone online.
From a technical perspective, the Apple chart looks tired. After a 50 point jaunt following the announcement of iPhone5, the stock has traded in a roughly five point range in four of the five previous sessions. Unless Apple is unable to maintain a few more closes above 700 and distance itself from this key psychological level it could easily be right back at the September 12 close of 669.79. Investors attempting to lock in gains in Apple should pay close attention to trading activity at Thursday’s low of 693.62.
After reaching a 52 week and multi-year high on Monday at 92.50, Exxon-Mobil (NYSE:XOM) succumbed to some mild profit taking. However, the selloff was interrupted when the issue reached the 90 level, the area from which it had broken out earlier in the month. The ensuing rally on Thursday morning, which aided the index from falling into the abyss, ran out of steam in the 92 handle at 92.23 on Friday. Now with four of the previous six highs from 92.22-92.50, another major resistance point for this issue has been formed. In order for Exxon-Mobil to have a substantial correction, it must take out the 90.09 low and close below the key psychological level of 90.
One stock you can almost never count on for a solid breakout or breakdown is Microsoft (NASDAQ:MSFT). Just when it appeared MSFT was breaking out to the upside above 31.25, as it rallied to 31.61 on Friday but is now right back down at 31.19. MSFT which has gone nowhere during the recent rally seems intent to keep it that way. Even a dividend boost on Thursday did little to attract sustained buying interest. At this time, if you are holding MSFT and expecting much more than the 2.95% yield from its dividend, it may be time to reevaluate your strategy. For now, as long as MSFT can maintain the 31 level, it still has a chance to make a run at the 52 week high of 32.95. If not, MSFT just may stay in a 30-31 trading range forever.
A culprit in Friday’s decline was International Business Machines (NYSE:IBM). Following a strong opening, IBM was unable to penetrate the major resistance just under 208. Earlier in the week, IBM reached 207.99 on Monday and 207.88 on Tuesday. But instead of a double top, IBM made it a triple top with a 207.94 high on Friday. From that level, IBM retreated almost two full points and closed just off its low of the day at 205.98. With 205.55 being Monday’s low and 205.30 being Thursday’s low, IBM bulls will need that level to hold in order to prevent a quick slide to the seven day low of 203.46. Below that level IBM could be back at 200 in a heartbeat.
General Electric (NYSE:GE) posted a 42 cent gain this week, while going ex-dividend for 17 cents on Thursday, rewarding the dividend capture traders. The stock looked like it was going to close the week strong, but large sell imbalances on Friday’s close pushed GE down to close at 22.53. For those investors looking for follow through on the upside, GE will need to hold Friday’s low (22.46) early in Monday’s session. If not, there is no major support until Thursday’s low of 22.12. Expect large sellers at Friday’s high of 22.69 and additional resistance all the way up to 23.
Another issue dogged by large sell imbalances on Friday was AT&T (NYSE:T). After obliterating its former 52 week high of 38.28 and trading up to 38.58, T ended up just off the low of the day at 38.08. If T continues with the downside momentum, there could be major support at the double bottom from the Wednesday (37.52) and Thursday (37.60) lows. On the other hand, if T can maintain the 38 level, there may be minor resistance at 38.28 and major resistance at the multi-year high of 38.58.
Chevron Corporation (NYSE:CVX) continued to rally this week, but the pace has begun to slow. After making a new all time high on Monday at 118.50, CVX drifted lower until it found support under 116 at 115.50 on Thursday. From that level, it rallied three points and made a new all time high on Friday at 118.53 before retreating to close at 117.85. That level coincides with Thursday’s close of 117.85. Therefore, that area will be important to determine whether or not CVX, makes its third attempt at the 118.50 area or declines to test the major support at 115.50.
Johnson&Johnson (NYSE:JNJ) refuses to relinquish much of its gains since its 61.71 low in early June. After making five consecutive lows from September 12-17 between 68-68.08, JNJ took out resistance at 69 and settled slightly above that level at 69.06. Friday’s high (69.36) was 2 cents above the August 6th high of 69.34. As a result, that double top may be major resistance in this week’s trading. Above that level stands the 52 week and multi-year high of 69.75 and let’s not forget about the institutional sellers perched at 70. Below Friday’s low (68.84), minor support may found at 68.33 and the major support looms at the cluster of lows around 68.
Wells Fargo (NYSE:WFC) has been struggling in the 35 handle after making a multi-year high at 36.60 on September 14th. Whether it be downgrades by the Street or concerns over their net interest margins, WFC has been met with sellers on rallies. Now with a double bottom from Thursday (34.85) and Friday (34.80) in place, WFC may have found support for this week’s trading. A breach of this level may lead to a test of the major support formed by the triple bottom from the September 11th through 14th lows at 34.10-34.21. During rallies back into the 35 handle, expect minor resistance at Friday’s high (35.45) and major resistance from 35.84 (Wednesday high) to 35.99 (Monday high).
Coca-Cola (NYSE:KO) was a sell right from the opening bell on Friday. After opening up slightly at 38.73, just under major resistance around the 39 level, KO did not find support until just under the 38 level at 37.88. It did rebound slightly to close at 38.03, but needs to distance itself from that level early on Monday or it may be in for a test at the cluster of lows from 37.51-37.61. If KO rallies, expect minor resistance at 38.40 and major resistance from 38.74-39.00.
The overall tone of this Weekly Outlook is certainly more bearish than it has been in the previous few weeks. The reason for this being, the market’s rally has stalled and has entered another period of consolidation. And what happens after periods of consolidation? Either a continuation of the major trend (which is still up) or a key reversal. In my opinion, a breach of Thursday’s low (1443.50) would signal a much overdue correction is about to take place.
It’s the witching hour as options and futures expire today, which means a lot of added volatility on the opening. We’ll cite some key levels to focus on. Earnings from ORCL, KBH, DRI. AAPL iPhone 5 on sale. Premarket trading analysis:
The S&P futures are breaking through key support this morning. NSC with a profit warning and UBS with a bearish call on the banks is not helping the bulls. Earnings from BBBY, ADBE, KMX, CAG, and JEF. Premarket trading analysis: