Nigerian tensions increase and the Dow eludes 13K
Monday brought a narrow range digestive day across the broader markets. Nasdaq, S&P 500, and the Dow all closing red on the day, giving a lighter volume pullback on a very small range. The Dow managed to elude the 13, 000 mark that it is eying. I think this is more psychological than anything technical. Crude rallied up $1.78 today to close at $65.89, Nigerian tensions definitely put some pressure on the barrel price. Gold dropped $1.60 on the day to close at $694.20.
This week is really the last biggie on earnings, after we complete this week we get into more second tier stocks with far fewer big caps. The big caps influence the sector and give us the sympathy market moves, the second tier are less likely to influence the sector. Which can remove some of the catalyst from the market, but also some sector volatility. Of course economic data, mergers and FOMC meetings never leave us and keeps the volatility around for us. The next FOMC meeting is May 9th and a two day meeting will take place June 27-28 regarding fed fund rates. So as we close out the last full week of trading in April we still have plenty of things to look forward too. But my point is will the catalyst to propel us higher still be around with no correction?
Before we go further tonight, I want to remind you about inter market relationships. The S&P 500 is made up of 20.7% of financials, 14.9% of healthcare and 14.3% of technology. There are no financials in the Nas 100 which is heavy in Tech (48.4%) and Telecom 20.1%. This is why I outline each sector below nightly (for those that get the fulls thoughts) so we know where things are. I don’t focus heavily on healthcare or telecom, but we keep an eye in the chatroom and I assure you I watch it and would mention anything of significance at night. So let’s move on now.
Going into Tuesday the market can still take some correction without turning the trend around. The daily charts we left a lot of potential to see bearish engulfing patterns, to confirm this we need a lower close tomorrow to complete the engulfing and move us. But because this pullback was quite narrow and on lighter volume that is also a little concern on watch any engulfing patterns. To the letter of the law in technical analysis it needs to be heavier volume, but because we are coming off option expiration I am giving it some wiggle room on the letter of the law, but Tuesday can’t fudge it, we have to see selling on volume to convince us of much.
Another narrow day of pullback would work off the short term oversold condition and let us breath up here and buy a little easier if the bulls are planning to hold up the market for a run into higher territory. I can’t see that coming without a pullback though, but most importantly if we do run with no pullback, where is the FUEL going to come from? Banks were weak today closing just over the 50dma, which will be key support (115.94) to hold above for any strength in banks. Broker the other key component in financials significantly stronger than banks and closed just under 78.6% resistance (250.98). This is key to break to see further upside and a perfect place for a pullback. SOX (semiconductors) the key in tech, had some struggle with toppy candles last week and today put in some selling. TXN, KLAC, MXIM, LLTC, XLNX, SNDK all are SOX components giving us 6 of the 19 reporting this week. However, more important trivia to know is these 6 stocks make up about 48% of the sector….YES that is big, KLAC is the heaviest weighted at about 11%.
TXN traded higher after the bell on better than expected earnings, they didn’t give a lot of outlook into the future. This will help tech off the bell, but we are still in need of a pullback. So let’s keep our buy buttons on ice until we see the open and to see if any early strength fades as we test Monday’s highs possibly.
Economic Data for April 23 – 27 Tuesday 10:00 Consumer Confidence, 10:00 Existing Home Sales, 10:00 Richmond Fed Index, Wednesday 08:30 Durable Orders, 08:30 Core Durable Goods Orders, 10:00 New Home Sales, 10:00 Fed Chairman Bernanke Speaks, 10:30 Crude Inventories, 12:30 Fed Governor Mishkin Speaks, 02:00 Fed’s Beige Book, Thursday 07:30 Fed Reserve Bank Pres Yellen speaks, 08:30 Initial Claims, 10:00 Help Wanted Index, 10:30 Nat Gas Inventories, Friday 08:30 GDP-Adv, 08:30 Chain Deflator Adv, 08:30 Employment Cost Index, 10:00 Mich Sentiment Rev.
Some earnings for the week: Tuesday pre market AKS, AL, T, BJS, EAT, CP, COH, DD, ELN, ESV, FRX, JBLU, LXK, LMT, NOC, OXY, PCAR, SEPR, STTX, X, USAP, and after the bell ADVS, AMZN, CAKE, OSG, PNRA, PXLW, RFMD, SMTL, SSTI, STM, SUNW, VFC, VECO, WEBX, WBSN, XL. Wednesday pre market EYE, AMG, APU, ATMI, BHI, BA, COP, GLW, EXC, FCX, GD, GENZ, ISE, LPX, NSC, OSTK, PFCB, R, TASR, TIN, UAUA, UPS, WLP, XTO and after the bell AFFX, AKAM, ACL, AAPL, BOBJ, CTXS, FFIV, FISV, HLIT, LSI, MXIM, MTH, MIPS, PMCS, PHM, QCOM, RMBS, RYL, VARI, VAR, WEN, XLNX, ZMH. Thursday pre market MMM, AET, BZH, BMY, CAH, CRA, CFC, CY, DO, DOW, DSPG, XOM, F, HAL, HET, IMCL, LVLT, ERIC, MHO, MESA, MEH, MNST, MPS, NCR, NEM, NYX, HOT, SU, SPWR, TSM, TRA, LCC, VLO, XMSR, ZOLL, and after the bell ACTU, BIDU, BRCM, DECK, DRIV, BOOM, ELX, KLAC, LSCC, LPNT, LAVA, MFE, MCHP, MSCC, MSFT, ONNN, OSIP, RACK, RADS, SNDK, SWIR, SOHU, SYNA, ULTI, UHS, VSEA, VLCM, YRCW. Friday pre market AT, CVX, CVH, CMI, FLIR, IR, GAS, ZEUS, OCR, SPG, SSCC, TOMO, VMSI, WMI and after the bell CCJ, GHCI, MSTR.
Compx (Nasdaq composite) closed -2.72 at 2523.67. Support: 2517.16, 2515.24, 2511.08, 2504.63, 2494.23. Resistance: 2528.60, 2532.24 (years high), 2536.86, 2542.75, 2585.78, 2600.37. Daily chart below
Monday was pathetic action, but we expected that to be the case. So congrats to those that didn’t overtrade and took things slowly today. Tuesday we should see more movement and a bigger range.
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