US - Market Direction 41 (Mar 18 - May 19)

[winston]

How Long Can the Market’s Comeback Really Last?

Stocks made a comeback yesterday, but expect volatility to continue in the weeks ahead

By ANTHONY MIRHAYDARI

Extreme price volatility, both up and down, come during periods of market weakness.

Source: Investor Place

https://investorplace.com/2018/03/marke ... en=3879240

[winston]

MONDAY

After 3 days off and the quarter end there are a few things to watch for.

First, does new money enter and help keep the Thursday move alive. Higher volume gains that session, but that could be due to adjusting positions ahead of quarter end. New money is good and needed, but it can run out after a session or two.

Second, do gains hold versus the high to low action.

Third, does volatility calm down. That shows the buyers and sellers are resolving their issues. Of course volatility can end with stocks rallying or selling off. One side or the other will win out.

Fourth, do leaders emerge upside? Will new leaders, perhaps from metals or drug-related , emerge? Will current leaders testing key levels reengage as leaders? A market rally has to have leadership. A market can start a rally, but if significant leadership fails to emerge, the rally fails as well. Will MU, HLF, STX, NFLX, metals, drugs, retail emerge to lead?

Okay, plenty to watch for but the Dow and SP500 have set up in the double bottom at the early February lows at the 61% and 78% Fibonacci retracement, respectively.

Source: Investment House

[winston]

CHARTS

DJ30: After piercing lower to almost the February intraday low the prior Friday, The Dow held at the February closing low as a floor all last week. That keeps the Dow over the 200 day, at the prior lows, and the 61% Fibonacci retracement of the September to January rally. Lots of support, lots of reasons to hold and rally based upon this pattern. Now it shows if it can.

SP500: Very similar to DJ30, testing the February closing low the prior Friday, holding over that level all last week. In addition, that keeps SP500 over the 200 day SMA and a potential double bottom near the 78% Fibonacci retracement. The technical pattern is there, but SP500 needs to
find the leadership.

NASDAQ: Tried to rally early week, failed as a lot of its leaders broke their patterns. Faded to the uptrend from early 2016, held it Wednesday on strong volume, rallied Thursday on strong volume. NASDAQ can hold its uptrend if it finds some leaders.

Source: Investment House

[winston]

NEW HIGHS OF NOTE LAST WEEK

Match (MTCH)... online dating
Estée Lauder (EL)... cosmetics
Lululemon Athletica (LULU)... innovative apparel
Guess (GES)... clothing and accessories
Tapestry (TPR)... luxury purses
DSW (DSW)... footwear
Burlington Stores (BURL)... discount "one-stop shop"
Callaway Golf (ELY)... golf equipment
IHS Markit (INFO)... data and analytics
MSCI (MSCI)... stock market indexes and analytics
Paycom Software (PAYC)... human-resources software
Harris (HRS)... surveillance, electronic warfare
Continental Resources (CLR)... oil and gas
Marathon Petroleum (MPC)... gas stations and refineries

NEW LOWS OF NOTE LAST WEEK

Sprint (S)... debt-laden telecom
Dish Network (DISH)... "cord cutting" victim
Simon Property (SPG)... shopping centers, outlet malls
Kimco Realty (KIM)... shopping centers
Signet Jewelers (SIG)... jewelry stores in malls
CVS Health (CVS)... drugstores
Whirlpool (WHR)... appliances
General Mills (GIS)... Cheerios, Betty Crocker, Pillsbury
Hasbro (HAS)... toys

Source: Daily Wealth

[winston]

Stocks broke key level in sell-off that signals potential for bigger correction

An ugly sell-off Monday signals more pain ahead for the market as stocks broke key technical levels.

The S&P 500 closed below its 200-day moving average for the first time since June 2016.

But strategists say while the reasons for a sell-off are piling up, the market could change focus in coming weeks to a very strong earnings season.

Meanwhile, the February lows, at around 2,530, could be the next test for the S&P 500, which broke its important 200-day moving average.

by Patti Domm

Source: CNBC

https://www.cnbc.com/2018/04/02/stocks- ... KW,1FN38,1

[winston]

Supports

As for the market, it's important to note that we are still trading above the correction lows seen in February. For the S&P, that's 2,532.69 (the correction low of Feb. 9th, 2018).

After that, the next levels of support come in at 2,467.11 (which is a gap left on the chart from Sept. 9th, 2017) and then 2,417.35 (which is the pullback low from Aug. 8th, 2017, which preceded the aforementioned gap).

At worst, that would put the market down as much as -15.86% from its all-time highs in January. Still correction territory, but not bear market territory.

Source: Zack's

[winston]

Tech stock prices were ‘not real life’ — and the correction has only just started, expert says

This week kicked off with more bad news for tech stocks, dragging major U.S. indexes into correction territory that some experts predict is just the beginning of a longer downturn.

Tech is facing a mounting sell-off amid growing fears of regulation and companies hit by scandal, production problems, testing accidents and President Donald Trump's Twitter ire.

The S&P 500 and Nasdaq closed at their lowest levels in nearly two months Monday, with the S&P's tech sector down by 2.48 percent by the end of the trading day.

by Natasha Turak

"All of the FAANG stocks had become too high by normal valuation standards," Griffiths said, describing the market as a "mania" that needed to be corrected.

I think Facebook looks vulnerable, I don't see many of the others looking as vulnerable."

Source: CNBC

https://www.cnbc.com/2018/04/03/tech-st ... KW,1FR5M,1

[winston]

Chart of the day: Warning signal for Nasdaq

by Nicole Elliott

It took seven whole years for the tech-heavy Nasdaq Composite Index to break above the record high of 4,800 points set in 2000.

Since then, the rally had kept to a steep but narrow trend channel throughout last year – until possible over-exuberance set in this year.

After gapping lower in March, the index retested the 200-day simple moving average this week.

With so many investors favouring the index tracking and momentum trading styles, the risk is they will all be bailing out simultaneously.

The 50-day moving average has turned down, and were it to cross below the 200-day one, we would get a “death cross”.

This could trigger the exodus we are worried about.

http://www.scmp.com/business/markets/ar ... nal-nasdaq

[winston]

MONDAY

Earnings are here and I have heard many, many commentators talk about how earnings are going to right the market's ship because there is expected 16% to 19% growth. Okay, great, but those are the expectations. Earnings tend to work best when expectations are not too grand then companies blow by them as did FAANG in October 2017.

The second competing force is leadership. The market can bounce on earnings given the pullback heading into the season. If the move is going to sustain then it must have leadership. There is still not enough leadership. The two weeks bouncing up and down at support has improved some patterns, but frankly we don't see enough good patterns in sectors that provide leadership for true moves higher.

Thus, this setup ahead of earnings is one that can easily lead to an earnings bounce. After that, however, unless more and more stocks set up a bit better and make good upside breaks, any rebound is likely limited in its height and duration.

Upside plays into earnings season? Yes. Downside plays on deck if the 2 weeks of bouncing at support fails? Yes as well.

Source: Investment House

http://www.investmenthouse.com/frblog.php

[winston]

CHARTS


DJ30: A second week bouncing around the February lows, indeed undercutting the February low intraday Monday. All the while DJ30 danced at the 61% Fibonacci retracement of the September to January rally, as well as the 200 day SMA. Two weeks at these levels, perhaps getting a bit too long.

Did try to bounce starting Tuesday and through Thursday, but had no volume or breadth. Now with the Friday drop DJ30 starts over to try again, but no doubt it like gives it a shot. Note how it came off the low after tapping the 61% dead on. Double bottoms at this level have a good history, if all remains equal, of rallying nicely.


SP500: Very similar to DJ30, also spending a second week near the February lows, undercutting the closing low Monday through Wednesday on the intraday lows. It held at the February closing low and the 200 day SMA, and tapped the 78% Fibonacci retracement on the Monday intraday low before rebounding, just as it did on that big intraday drop in early February.

Thus, basically the same as DJ30, just at a lower Fibonacci retracement, also a good level to double bottom and rebound.


NASDAQ: NASDAQ tested down to the early February closing low starting Monday, and that put in the low for the week though it was tested Tuesday and Wednesday. On the closes, NASDAQ held very near the trendline from early 2016. It also held over the still rising 200 day SMA on the lows.

Not a double bottom as explained last week given the higher March high, but it is in a channel outlined by the highs and lows this year. Perhaps it will adjust into a new, larger channel than the prior tight one that was of course aided by the FOMC's spoon feeding the market.


Source: Investment House