*First off, I need to apologize for suggesting that the December Fed meeting was suppose to be held this last Wednesday. It is in fact this coming Wednesday and I wanted to clarify that.
As I suggested last week, it appears that the market is going to acknowledge the prior pattern of consolidation/pullback after breaking the upper boundary of the Bollinger Band. We saw the first substantially negative week for the market in over two months. No significant technical damage was done in the major averages on the longer time frame, but it was notable enough to be mindful of where the key supports are going forward. Lets take a look at the Weekly S&P chart:
Once again these arrows show the recent instances of where the market had poked through its upper range. In each case price either traded sideways or lower in the subsequent weeks that followed. Since its most recent violation we have seen two sideways weeks and now a decidedly negative move. This is just something to be mindful of.
The most important things will be the key support levels just under current prices:
First we will be watching the upper triangle line that has now acted as support since its breakout back in October. That will be the short term level of interest as well as the horizontal support from the 3 week consolidation at the end of October and early November...That low is right near 1,745.
The next and most important level to have on your radar is the intermediate term uptrend support and rising 20 WMA. Ultimately a break of the 1,700 level will be needed to seriously threaten the current rally.
The last line of defense of the uptrend will be the current swing low within the trend at 1,646. A break of that low will suggest a trend shift that we have not seen in over a year. That will be a time to become very cautious and the market will be in a "prove it" mode. That's still a long way off, so there is no reason to anticipate that move and panic here. But it is important to know the risk levels we face as the rally continues.
Lets see if we can hold the short term support and triangle breakout in the coming weeks.
--Now we need to take a quick look at our Top 10 list and see where everything stands heading into the final two weeks of 2013.
Enbridge (ENB)
Enbridge has been testing the lower boundaries of its support and our stop out level. While it has been crushed since we bought it, buyers seem to finally be coming in at the $40 level and supporting shares. We have seen two weekly bars showing bullish wicks after bouncing off of the weekly lows. But there are problems here as we are now squeezed between the support at $40 and a now declining 20 WMA. Being below a declining 20 WMA is not the highest probability place to be, but if the $40 continues to hold, that would be positive going forward. While the position has been far from great, it has managed to hold twice now and its time to show what the real intentions are for the next wave in prices.
PPG
PPG continues to hold up really well. I've been waiting for this thing to correct for the last several months and it just never goes lower. It is still holding above its upper channel line and continues to find aggressive buyers on any decline in prices. Nothing much else to say here, stick with it.
3D Systems (DDD)
Since the larger reversal week we saw a month ago, prices have steadily continued to climb. This week prices finished at new all-time closing highs while the S&P went through its first corrective week in two months. I love to see a stock perform so well when the market is weak. Also notable is the fact that since the large selling week, volume has shown two consecutive accumulation weeks and higher volume is accompanying the new highs in price. All good stuff.
While we are not fully positioned here we do still maintain a half position from our
original entry. This is exactly why you never sell your entire holding in a strong uptrend. Nobody can call the tops consistently and big trends can continue much longer than most would consider reasonable. We will continue to hold our 1/2 position going forward and await the inevitable consolidation before we determine our new stop levels and new setups to add back to our holding.
Hain Celestial (HAIN)
HAIN continues to hang out at all-time highs. Its most recent pattern has been to consolidate and pop, then consolidate and pop. Right now we are consolidating, and until the uptrend support fails we have to assume that the pop will follow. I'm very pleased with the setup going forward and think there is still plenty of upside to come.
Apple (AAPL)
AAPL is holding very nicely since rallying hard recently. There is not too much to say here except that as long as prices hold the support band at $500 and the Relative Strength continues to trend positively, you want to be positioned along with this uptrend. This is a very nice bullish rounded bottom formation and the long term bull market seems to be resuming.
Home Depot (HD)
HD has the look of a stock ready to surge and resume its strong uptrend. Since taking out its downtrend resistance 5 weeks ago, price has flagged really nicely and seems ready to bounce right off the retest area and 20 WMA.
Cummins (CMI)
CMI has been in stall mode for a few months now. That being said it has been able to hold onto the prior all-time highs and
should be ready to continue higher. The RS trend is sliding right along the uptrend support and will either bounce or roll over. Price is just hanging right on my stop level also, closing right at the rising 20 WMA and prior high inflection support. A break and close below that level will see us exit.
Wells Fargo (WFC)
WFC has a very similar look to Home Depot and is flagging since breaking its downtrend. This looks really good above about $42.
Ford (F)
Ford continues to show signs of rolling over but the price trend is not quite dead yet. This week was a follow through week from its 20 WMA failure and is now about to retest the key uptrend channel we have been following closely. We have a reduced holding and will continue to stay with the name as long as price can stay above the uptrend support and key low at 15.70. I am not encouraged by the RS trend failure we have seen and will need to see a quick stabilization to get re-interested in this longer term. A breakout above the $18 area would be quite notable, as would follow through above $19 which would set into motion the large Inverse Head/Shoulder base we have discussed previously.
Clean Energy (PBW)
We had one change to our Portfolio this week and that was the
exit of PBW. We saw a clean breakdown of the uptrend support, 20 WMA and inflection swing point from the failed breakout. While the longer term setup (as shown above) has some very intriguing potential, we are better served to step aside for now and await a more positive setup. I hope this just holds around the $5.50 area and turns right around. But I can't be sure it will do that, it could just as easily roll over from here and resume the long term downtrend. Only time will tell, but if this stabilizes and breaks out, we will get right back in.
That's about it for this week. It will be interesting to see how the market handles the Fed meeting on Wednesday as many on the Street feel that they will begin to reduce their asset purchases. I don't see this happening since it is the final Fed meeting with Ben Bernanke as chairman. It just doesn't make any sense that they would begin to change policy with a lame-duck chairman, especially considering how dovish new Chair woman Janet Yellen has been when addressing future stimulus activity. But as we well know, the market doesn't care what I think and will do as it sees fit. We will be best served to simply follow our plan and ride our winners, while keeping a watchful eye on the key support levels for the SP500.
No comments:
Post a Comment