May 28th Weekly technical outlook – S&P and top components
Four of the five closes between 1314.75-1315.75 and Friday’s close at 1315 this week is about as much consolidation as you are ever going to witness in the S&P 500 Index. The question now remains, consolidation to go higher or lower?
At this time, the bulls are protecting the 1300 level with a vengeance, spending very little time under that level, briefly on Sunday night and Monday morning and once again on Wednesday. Therefore, the correction is over unless the index goes back to 1300 and breaches the weekly low of 1287.25. As stubborn as the bulls are at 1300, the bears are defending the 1325 level in a similar fashion. Although the index reached 1329.75 early Friday morning, three of four intraday highs this week were between 1322.75-1326.50. Thus, a move above 1325 would be enough to ignite some short covering as well as pressure the “buying the dip” crowd into a more aggressive stance.
Apple (NASDAQ:AAPL) exploded Monday off the 530 level, but ran into some trouble on Thursday near the critical 575 level and closed at 562.29. For now, major support can be found at the double bottom from Tuesday (552.28) and Wednesday (553.23). As long as AAPL can maintain that level, look for another test of the 575 area. It would not be a good idea to be short AAPL if it clears the weekly high of 576.50, besides minor resistance at 578.46, the next resistance level is not until 586.
Exxon Mobil (NYSE:XOM) cannot crack the 83 level. Three times this week it crept up near that level only to retreat and close below it. Similar to the S&P 500 Index, XOM had four of its five closes for the week in a tight range (81.95-82.08) with the latter being Friday’s close. The double bottom from Thursday (81.71) and Friday (81.68) will provide major support and a breach of that level would signal a test of the weekly low of 80.43. If XOM can finally take out the sellers around 83, the next minor resistance level is not until 84.25.
International Business Machines (NYSE:IBM) did not participate in the rally this week at all. In fact, Beamer closed down over three points on the week. Furthermore, it closed at 194.30 just above major support at the double bottom from Thursday and Friday at 194. Below that level is the weekly low at 193.20, but IBM is more likely to test major support around 192 if the selloff continues. Poor results from Dell (NASDAQ:DELL) mid-week put pressure on the entire sector and dragged IBM along for the ride. Two major resistance levels to focus on are 196.50 and 198.
Yet another issue with multiple closes in the same area is Microsoft (NASDAQ:MSFT). For the first time since late January MSFT traded under 29, bounced and attempted to fill the gap induced by the DELL debacle at 29.50 to no avail. The three closes around 29.10 and Friday’s low (29.01) provide minor support, with major support at the weekly low of 28.64. The three highs from the end of the week (29.40, 29.30, 29.36) will be major resistance.
The pattern of consolidation in the Big 10 continues with General Electric (NYSE:GE) which posted all five closes this week between 19.12-19.25. After dipping under 19 on Monday (18.95) and Wednesday (18.75), GE managed to reach 19.39 on Thursday and 19.42 on Friday, only to retreat both times and settle in the aforementioned range. Perhaps a break out will occur above 19.42, but there will be plenty of sellers at all the previous highs from early April and May. As long as GE stays above 19, there remains a slight bias to the upside for this issue.
Chevron Corporation (NYSE:CVX) posted a modest .40 gain this week. Although it was able to cross over the psychological resistance at 100 three times this week, it only managed to close above it one time. With Thursday’s high (100.12) and Friday’s high (100.24) just above that 100 level, there is strong technical resistance to go along with the psychological resistance. Therefore, expect further declines in CVX until 100 becomes support instead of resistance. Thursday’s (98.55) and Friday’s (98.42) lows are the only area of support until the weekly low of 96.70.
How much longer can the High Frequency Traders leaning on the large sellers at 34 in AT&T (NYSE:T) keep a lid on this issue? It seems like forever. Although this week it did manage to make three highs over 33.80 and a new 52 week high at 33.94, the tug of war at 34 continued. Perhaps T can get a running start one day this week and start the day near that level and squeeze the HFT crowd who seldom take the risk of participating on opening prints. Twice in the last two weeks when T has fallen under 33.10, it has responded quickly with a rebound. If it reaches that level again and starts to hang around, the uptrend in T may be nearing the end.
Bad news and good news for Procter&Gamble (NYSE:PG). The bad news is the support at 63 did not hold. The good news is that the support at 62 may hold up. After reaching 62.04 on Wednesday, PG managed two higher lows on Thursday and Friday. Therefore, for you bottom-pickers and yield craving investors, PG looks tempting. However, if 62 does not hold, get out and reload. Major resistance has settled in around the 63 level, as the last three highs were between 62.98-63.20.
Johnson&Johnson (NYSE:JNJ) continues to decay. After going ex-dividend mid week, JNJ provided the dividend players only one shot briefly to scratch their stock purchase while keeping the dividend. And on Friday, JNJ was very weak, trading down 62.29, a level not seen since late November. Until the string of three lower highs, lows and closes is broken, buyer beware. Also, expect some size to develop at 63 as the dividend playing crowd lowers their expectations on their exit price.
Wells Fargo (NYSE:WFC) is holding up much better than many of the other financials. Perhaps that can be attributed to its limited exposure to the ongoing European debt crisis. After trading below 31 (level not reached since March) on Monday (30.52), WFC staged almost a two point rally by Tuesday afternoon, a pretty rare move for this issue. However, the euphoria was short-lived and WFC traded under 31 again on Wednesday, but recovered by Friday to settle at 31.86. Expect WFC to bounce between 31-32.50 for a few days before it decides if its correction is over.
Although the June S&P 500 Index futures had over a 40 point range, in reality, it spent a majority of the week meandering between 1310-1320. As evidenced by Friday’s close of 1315, the stage is set for Tuesday. Of course, events inEuropecan alter things while the futures trade Sunday night and Monday, but the market is primed for a move. If the market can rise above 1325, expect a sharp rally to at least 1350. On the other hand, if the bears can nudge the index below 1300 for a third time with no quick rebound, the correction will continue.
Comments are closed.