Notes for Today, April 1st

Jim’s Market Notes:

If you are waiting for a good April fool’s joke to start your day it may come in the form of performance for the first quarter. Both stocks and the US economy are on shaky ground. All of the dooms day comments from the perma-bears are starting to hit the headlines again and the selling is starting to have a bite. I am not a non-believer in the markets… just looking at the facts as they line up. Time for patience, a dose of reality and downside protection in portfolios.

The singing of praises for the bounce higher on Monday were groans of selling by the close on Tuesday. The futures are pointing lower again today and a test of the 2040 mark on the S&P 500 index is not out of the question near term. What’s bothering the herd on Wall Street and your street for that matter? Rotation confusion… buy growth stocks on the Fed action… oops that didn’t happen sell growth stocks and buy what? Europe, Asia, Emerging Markets? Too much not to like and it is making it hard to move money to where it will be treated well and less volatility. This is the reality of uncertainty in the US economy, stocks and bonds.

It is coming down to decision time for investors and some money is moving to the sidelines, some to global markets, some to bonds and some to cash. As we go forward and the anxiety levels shift the trends will become clearer for the longer term views. For now the traders, actually day traders are having a grand time.

Economic data¬†is the call of the day as we start the March reports with the all important ISM manufacturing data. Watching to see how this unfolds and earnings are just around the corner for the first quarter…¬†Still in patience mode until we have a sustainable trend up or down. Patience please.

SECTOR NOTES OF INTEREST:

One quarter ends another begins. Now is the time for evaluation and planning relative to intermediate and long term positions. Short term we see the confusion, volatility and uncertainty driving the activity as the indexes continue swing up and down with a small bias to the upside short term. Manage the downside risk and listen to the data, technical moves and global juggling for facts not rumors.

S&P 500 Index (SPY) tested lower to the $204 level and held. Trendline off the October low is in play. $198.53 could be¬†the next support level¬†on downside. Bounce Monday, sell Tuesday and Wednesday… pointing lower to start.¬†¬†(DIA sold again bringing the $176.40 level of support back into play.)

NASDAQ (QQQ) at the 50 DMA and October short term trendline. $104.80 support back in view with 1% drop on Tuesday. 200 DMA would be the key level of support with plenty and levels in between that could hold. Watching with interest as biotech and semiconductors struggle to find any traction.

Russell 2000 (IWM) fell back to test the $121.25 level and held. A break lower would bring the trendline in play off the October low short term and accelerate the selling. Moved back above the $123.75 mark. Holding up well along with Midcaps (IJH).

Volatility Index (VIX) settling into a range of 12.75-17.10 for now.¬†Rally didn’t show much in terms of conviction and selling resumed with push higher in the VIX.¬†Anxiety relative to selling seems to have the edge… watch for the next opportunity. $15.80 on VXX is of interest.

Transportation (IYT)¬†Watching as indicator for the broader indexes.¬†Plenty of damage done last week¬†with the durable goods orders disappointing. Almost like the sector knew what the durable goods report would say. Held the 200 DMA support Friday.¬†Still not gaining any traction on the upside… shorts are circling.

Dollar (UUP) held the $25.25 level of support. Sold against the yen overnight? Watching to see how the buck trades today. The upside is still the bias and the challenges in Japan may be with only Japan for now. Watch today.

Bonds¬†(TLT)¬†Rallied on the FOMC news… now the endurance question is unfolding with the move to the 50 DMA.¬†Stalled near the high and the $132.25 resistance. Tested¬†the 50 DMA¬†and hit exit from my view.¬†Will the rising nerves push money towards the safety trade? watch the yields and move near term. Downside bias is still present.

Crude Oil (OIL) bounced and $9.80 entry point for the brave and anxious. Friday reversal on reality of supply offsetting jump on Middle East issues. Exit points already hit for small gain on crude, but it validates the lack of direction for the commodity and the news driven nature of prices. Stuck in the bottoming range and that is that for now.

Semiconductors (SOXX) selling bias still in play. The INTC rumored acquisition of Altera announced late Friday helped push the sector back above the 50 DMA on Monday. Plenty of work to do and the rotation from growth is still an issue. $92.58 support and $95.15 resistance. Decision time.

Financials (XLF) bottom of the range again with $23.75 support. Hold $24.15 level to clear resistance. KRE support $40 above $40.68 would be good for sector on upside, but still needs to hit new high to be of interest. Downside showing up early today… watch support to hold.

Biotech (IBB) tested 50 DMA. $356 resistance. need the sector to show investor belief going forward for growth to stay in play. Sold back to support at the $342 mark… 50 DMA is key short term support.

Solar (TAN) second test of the move higher. $42.30 support, held $43.75 level and bounced Friday. I like the upside continuation in the sector looking forward. Broad market direction could have influence short term.

Housing (ITB) $28.15 break from range on Monday and trade is there for the upside move and follow through. sector has positive momentum from the data… could be ready to move higher, but the broad markets will have some influence short term.

Europe (IEV) Tested the $44.11 support. The stimulus from the ECB is in play…¬†Only one worry for me currently, the trading is still coupled to the US markets. If will outperform, but is susceptible to any sneeze or cough in the US. Asia had it’s say overnight and the could have some additional impact today. Beware of this moving forward. This is a long term position opportunity my view anyway and plenty of volatility to go with it. Not for the faint of heart.

“Vision without action is a daydream… Action without vision is a nightmare.” Japanese Proverb.

Long Term Opportunities: 

Long term positions take time to manage and patience to let them unfold. The short term can be managed with hedging or trading off the longer term positions. The goal is to build the position and manage the risk. Sometimes the short term news and events cause anxiety… the goal is to mitigate the risk and protect the downside as we allow the stock time and room to grow. If you don’t like long term holdings don’t read the data below.
  • Facebook (FB) – $73.15 entry (10/16/14) added 1000 shares back relative to the long term outlook following the choppy drop in markets. Earning remain¬†good, but the outlook showed higher costs and has kept pressure on the shares to stay in the current trading range. >¬†Added to position: 500 @ $77.50 – 1/8< ¬†TODAY:¬† Continues to show strength for now…. patience with selling in markets near term.
  • Twitter (TWTR) – ¬†(1) Added 500 shares at $42.80 (10/28/14). (2)¬†Added 500 shares at $39.20¬†on¬†1/9/15. Use $45 at exit on shares added¬†(3)¬†Added 500 shares at $40.25 for trade Sold at $46.25 on 3/10/15. This is a long term holding, but we will trade on short term technical data if warranted. TODAY:¬† Holding steady and still looking for follow through on upside move.¬†
  • Bank of America (BAC)¬†Sold all positions a this has become a train wreck of news and write downs. If the banks rally could find a upside trade in the stock, thus watching for a few more days as this unfolds.¬†¬†TODAY:¬†¬†A break of the support at $15.15 opens way for downside trades in the stock.
  • Whole Foods Market (WFM)¬†(1) Sold our first position for a $6.50 profit on 1000 Shares held from 11/20/14 – 3/11/15. The outlook has improved after making changes to the stores and adding new stores. The earning validated what I have been following for the last year and the company should be at the front side of a long term upside based on fundamental growth. I still like the long term outlook for the company. TODAY:¬†Broke 50 DMA and now support at the $52 mark. Selling is in place, but I still like the upside. We hit our stops, but still looking for the next opportunity as bottom or support is established.$51.50 is holding and could be near term bottom and reversal point.