While not being an avid Hockey fan I do appreciate the subtlety of the game. For most causal observers (myself included) a hockey game looks highly chaotic and random. There are big hits, wild swings and a seemingly invisible puck flying around. Yet most of the time, for the more astute fans the game hangs in the balance on every trip down the ice. Each challenge of the opposing goal could mean a win or a loss, yet more often than not a deflection or the relatively monstrous goalkeeper turns the try away.
Even when a player has the advantage and slaps a shot toward the goal, a beaten goaltender can still make a chance save by lunging his stick toward the puck. Just when things looked the worst, the goalie is able to prevent the potential loss with the "stick-save". This recent bull move has had many of these very same stick-save moments.
Just when the Bears think the top is finally in, when optimism has reached its peak and the Bulls have just been juked out of their skates, the market wings out its stick for the save. We saw this action not only in the major Indexes, but also in many individual stocks.
SP500 Daily chart
Monday morning saw a gap higher open that ran right into the resistance zone at 2,120. Tuesday saw a sharp reversal away from the highs and Wednesday was following through with a lower swing low. Not only did price make a new 20-Day low, but it did so on higher than normal volume and sliced the 50 DMA. A reversal from key resistance like this is textbook breakdown action. Except that right as things looked the worst for the Bulls, they stepped in at 2,068 and have taken back 50 points in two days.
We still need to see a push through 2,120 for a breakout to trigger, but a shakeout like we saw on Wednesday could be the fuel behind a new sustained move higher.
SP500 with the stick-save!
We saw similar moves early this week that violated many of our support levels only to snap right back and close above them Friday.
BA
UHN
FB
Granted these aren't the prettiest charts out there right now, but the reversals that have formed at key support appear notable at least. Keep in mind that these bounces could fail and we may get exit signals next week. We will just take it one week at a time, for now we survive and move on.
A major Bear justification of why this market is doomed has to do with the "wrong" sectors leading at the later stage of the Bull run. The arguement was that only the Defensive groups were showing Relative Strength: XLV, XLU, XLP. While the offensive groups were lagging, mainly Financials.
We have seen XLY and XLK lead recently and provide fuel to keep the market afloat. Even Energy pitched in over the last month. But if this market is really going to have some movement behind it, I believe the Financials need to take the baton and run for a while.
XLF has been a relative laggard since July 2013. Yes the sector has managed to trade higher, but it did so at a slower rate than the rest of the market. It has spent the better part of the last 6 months coiling in a narrowing range between $25 and $23. As this triangle formation has moved toward its apex, trading volumes have begun to dry up as equilibrium is being found in the supply and demand.
From periods of compressed volatility come expansions in one direction or the other. In fact the range since mid-March hasn't been larger than 2% from support to resistance. However Thursday and Friday's action moved over 2.5% to the upside. This move also occurred on higher than average volume.
In my opinion there is a lot to like from the Financial space currently. Many names have consolidated recent gains and are either breaking out now or setting up for moves off of support bases. Insurers, Money Centers, Regional Banks. You can find winners in each group. Here are the names I have exposure to accross my accounts:
GS, AIG, WFC
HOMB, ISBC, BOFI, SIVB, RDN
Other names of interest include:
SBNY, AGO, OZRK, BLMT, WIBC, COWN
AAPL 123.25
AIG 54
BA 143
BMY 58.75
CSCO 26.35
DIS 102.88
FB 78
GILD 97.70
GS 182.70
HON 100.44
PCG 51.38
SBUX 45.70
TWX 81.60
UNH 112.45
WFC 53.29
So far this market continues to behave consistently with the pattern of buyers supporting stocks on any dips. While there will be much discussion on to what Friday's bounce back really means, our focus needs to be on the current long-term trend in place as well as the trading range the major Indexes find themselves in. Until the pattern of buy every dip fails we have to assume this market just zooms back to new highs. That has been the playbook since 2013 and the signs are still in place suggesting a similar environment.
We have low volatility (measured by VIX), bearish sentiment around future prices, and accommodating global central bankers. That is the recipe for higher market prices in a nutshell.
GL trading! Follow on Stocktwits and Twitter @ZenTrends for updated charts and information.
Even when a player has the advantage and slaps a shot toward the goal, a beaten goaltender can still make a chance save by lunging his stick toward the puck. Just when things looked the worst, the goalie is able to prevent the potential loss with the "stick-save". This recent bull move has had many of these very same stick-save moments.
Just when the Bears think the top is finally in, when optimism has reached its peak and the Bulls have just been juked out of their skates, the market wings out its stick for the save. We saw this action not only in the major Indexes, but also in many individual stocks.
SP500 Daily chart
We still need to see a push through 2,120 for a breakout to trigger, but a shakeout like we saw on Wednesday could be the fuel behind a new sustained move higher.
SP500 with the stick-save!
We saw similar moves early this week that violated many of our support levels only to snap right back and close above them Friday.
BA
UHN
FB
Granted these aren't the prettiest charts out there right now, but the reversals that have formed at key support appear notable at least. Keep in mind that these bounces could fail and we may get exit signals next week. We will just take it one week at a time, for now we survive and move on.
XLF Gives Bears Heck
Financials (XLF)
A major Bear justification of why this market is doomed has to do with the "wrong" sectors leading at the later stage of the Bull run. The arguement was that only the Defensive groups were showing Relative Strength: XLV, XLU, XLP. While the offensive groups were lagging, mainly Financials.
We have seen XLY and XLK lead recently and provide fuel to keep the market afloat. Even Energy pitched in over the last month. But if this market is really going to have some movement behind it, I believe the Financials need to take the baton and run for a while.
XLF has been a relative laggard since July 2013. Yes the sector has managed to trade higher, but it did so at a slower rate than the rest of the market. It has spent the better part of the last 6 months coiling in a narrowing range between $25 and $23. As this triangle formation has moved toward its apex, trading volumes have begun to dry up as equilibrium is being found in the supply and demand.
From periods of compressed volatility come expansions in one direction or the other. In fact the range since mid-March hasn't been larger than 2% from support to resistance. However Thursday and Friday's action moved over 2.5% to the upside. This move also occurred on higher than average volume.
In my opinion there is a lot to like from the Financial space currently. Many names have consolidated recent gains and are either breaking out now or setting up for moves off of support bases. Insurers, Money Centers, Regional Banks. You can find winners in each group. Here are the names I have exposure to accross my accounts:
GS, AIG, WFC
HOMB, ISBC, BOFI, SIVB, RDN
Other names of interest include:
SBNY, AGO, OZRK, BLMT, WIBC, COWN
Lg-Cap Portfolio Updated Trailing Stops
AAPL 123.25
AIG 54
BA 143
BMY 58.75
CSCO 26.35
DIS 102.88
FB 78
GILD 97.70
GS 182.70
HON 100.44
PCG 51.38
SBUX 45.70
TWX 81.60
UNH 112.45
WFC 53.29
So far this market continues to behave consistently with the pattern of buyers supporting stocks on any dips. While there will be much discussion on to what Friday's bounce back really means, our focus needs to be on the current long-term trend in place as well as the trading range the major Indexes find themselves in. Until the pattern of buy every dip fails we have to assume this market just zooms back to new highs. That has been the playbook since 2013 and the signs are still in place suggesting a similar environment.
We have low volatility (measured by VIX), bearish sentiment around future prices, and accommodating global central bankers. That is the recipe for higher market prices in a nutshell.
GL trading! Follow on Stocktwits and Twitter @ZenTrends for updated charts and information.
Thanks again Cody, what a week! Glad fir the rebound, watched BA with some pleasure but not in again yet. Currently only in AAPL & DIS long.
ReplyDeleteReally appreciate your work!!!
Dave