Earnings and economic data will set our weeks tone.
Friday closed the day on the highs and made it a bullish one. Volume was light for most of the week and again Friday was light. Another light day rise across the broader markets. Oil fell on the day down 22 cents at $63.63 on the day. Gold closed up $10.20 to close at $689.90.
Technical overview: The Nasdaq Composite and S&P 500 have both cleared 78.6% and now have the swing high over head. The Dow and Nas 100 both just sitting under 78.6%, which will be key to clear. You can see the levels on the charts below to focus on for the week ahead. Semiconductors have spent 6 days in range and sitting on the 50dma and starting to look weaker and show some downside possibilities. After 5 days in range banks fell through the 200dma, still held the swing low but weakened as we closed the week. Friday Banks bounced back, but still under the key 200dma. Brokers sit in range for 7 days now. Software (GSO) sits at the years highs just opposite is the hardware sector (GHA I added this chart to our watch below with stocks in the sector) which is lagging. The Nasdaq 100 is made up of 48.4% tech. Sox sits mid range, software at the highs and hardware at the lows. Very mixed picture. The S&P 500 has 20.7% financials, which would be the brokers and banks. 14.3% of Tech and 14.9% of Healthcare in the S&P 500. So by watching the key sectors you can see what is holding the market up.
Right now we would only need the SOX or Software to turn down and the Nas would be in trouble. The Nas 100 is just under the 78.6%, clearing that level would be pointing us higher. But the tech sector is now facing more earnings and the Dow also sits at the key spot, so it will also be under pressure if earnings falter this week. Many financials are on this weeks list and banks are already under pressure, so this will still be in focus and either lift them from the dumps into bullish territory over the 200dma or push them much lower to turn the S&P 500 around quickly.
This is a big week for economic data, earnings and options expiration. Usually expiration week brings nice volatility and with our VIX dropping last week. I would say we are due to move. Several Fed speakers on tab this week, but no Bernanke. They’ve been pretty busy but all saying the same old “watch inflation†speak. So CPI on Tuesday will be biggie this week. Usually Tuesday, Wednesday and Thursday are the big days for movement for expiration week. So for now we’ll stay with that, but I will look for Monday to be active, but unlikely to be our big mover. Tuesday and Thursday stand out for data, so they’ll be bigger range days is my thinking.
Going into Monday I am slightly bullish, but not overly so. But given our close Friday and the way the Nasdaq finally woke up late day. I think the day can start off strong and then lead us into a pullback to position ahead of the CPI on Tuesday.
Economic Data for Week of April 16 – 20 Monday 06:30 am St Louis Fed Reserve Bank Pres Poole speaks, 08:30 am Empire State Mfg Survey, 08:30 am Retail Sales, 08:30 am Retail Sales ex-auto, 08:45 am Philadelphia Federal Reserve Bank Pres. Plosser speaks, 09:00 amNet Foreign Purchases, 10:00 am Business Inventories, 01:00 pm Housing Market Index, Tuesday 08:30 Phil Fed Reserve Bank Pres Plosser speaks, 08:30 CPI, 08:30 Core CPI, 08:30 Housing Starts, 08:30 Building Permits, 09:15 Industrial Production, 09:15 Capacity Utilization, 10:00 State Street Investor Confidence Index, 12:30 NY Fed Reserve Bank Pres Geithner, Wednesday 10:30 Crude Inventories, Thursday 08:30 Jobless Claims, 10:00 Leading Indicators, 10:30 Natural Gas Report, 12:00 Philadelphia Fed, 03:50 SF Fed Bank Pres Yellen speaks, Friday 12:00 Treasury Secretary Paulson Speaks, 12:15 Fed Governor Mishkin Speaks.
Some earnings for the week: Monday pre market AMLN, SCHW, C, LLY, WB, intraday JBHT and after the bell STLD, WERN. Tuesday pre market AM, AMTD, KO, DJ, JNJ, KEY, PACT, STT, STI, USB, WFC and after the bell CSX, ESLR, IBM, INTC, LLTC, PPDI, STX, USNA, WM, YHOO. Wednesday pre market AOS, ABT, AMR, ASML, BK, DSL, JPM, MOT, PNC, UTX, and after the bell CTXS, CBST, EBAY, GILD, ISIL, MOGN, NVLS, SYK. Thursday pre market MO, ASD, BAC, BAX, BBT, BLK, BOT, CAL, DHR, DHI, FITB, FCS, HOG, HSY, IGT, MRK, MER, NDAQ, NYT, NE, NOK, NUE, OXPS, BTU, DGX, SGP, POOL, SHW, LUV, STJ, TASR, UTEK, UNP, UNH, WCC, WYE, Intraday AXP, After the bell AMD, COF, CERN, CREE, FNB, FDC, GOL,GOOG, ISRG, ZION. Friday pre market CAT, HON, MAN, MCD, PFE, SAP, SLB, WL, WIT, XRX and nothing of interest after the bell. Keep in mind companies can change days and times of reporting last minute so you should check always if you are holding something reporting.
GHA Hardware sector…components by market weight within the sector:
SUNW (9.54%), HPQ (9.08%), EMC (9.02), IBM (8.92), STX (8.89), AAPL (8.42), RIMM (8.26),NTAP (8.01), DELL (7.70), LXK (5.62), LOGI (4.54), WDC (3.74), BRCD (2.58), QLGC (2.48), ELX (1.29),PALM (1.24), GTW(.67). With STX and RIMM both getting hit last week they could be nice focus this week. QLGC has been finding interest lately and LXK sitting just under the 50dma. All should be of interest. IBM reports Tuesday.
