Notes for Today, March 31st

Jim’s Market Notes:

Markets gap higher to start the week and the buyer hung tough throughout the day. The volume left some big question marks relative to the move as it was much lower for the gains posted. The stimulus promise in Asia or should we say hints that stimulus is coming. Buy the rumor and sell the news? This is getting interesting for the country rise as indexes hit new high.

Coming off the week of selling investors seemed determine to put money to work on Monday, but how much money went to work was another issue discussed after the close. Technically the move put the charts in better shape and offered come breathing room relative to support. It is also the end of the quarter and you get they typical window dressing for portfolios. In the end we are still watching the markets chop around looking for the key catalyst that is sustainable on the upside.

Economic data still not looking healthy with the Dallas Fed Index -17.5 versus -8..5 negative for the fourth month in a row. Personal income was up 0.4% and spending up 0.2%… not bad, but not setting a great pace either. Highest savings rate since 2012. Some fear creeping back into the consumer. Tomorrow starts the March data as we start a new month and new quarter. Earnings are next.

Still in patience mode until we have a sustainable trend up or down. Patience please.

SECTOR NOTES OF INTEREST:

The S&P 400 Midcap index still show the best looking chart. It can’t carry the rest of the market, but it does show some positives within the market. Financials had positive moves on Monday, Energy bounced again, technology continues to struggle as semiconductors lag and biotech bounced off the recent selling. No conclusions on Monday, but it was a positive day. Watch how the early trading unfolds as this is the last day of the month.

S&P 500 Index (SPY) tested lower to the $204 level and held. Trendline off the October low is in play. $198.53 is the next support level on downside. Nice bounce back with $209 the next resistance level on the upside. (DIA bounced back above the 50 DMA and $180.50 next level to clear.)

NASDAQ (QQQ) held the 50 DMA and October short term trendline. 1.1% gain $107 next hurdle to jump. 200 DMA would be the key level of support with plenty and levels in between that could hold. Move back above $107 of interest on upside.

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. previous highs next.

Volatility Index (VIX) settling into a range of 12.75-17.10 for now.¬†Rally didn’t show much in terms of conviction. Still watching how the uncertainty plays out.

Transportation (IYT) Watching as indicator for the broader indexes. Plenty of damage done on Wednesday with the durable goods orders disappointing. Almost like the sector knew what the durable goods report would say. Held the 200 DMA support Friday. Inside day and Monday followed through and looking for tradeable bounce short term $158.30 entry point.

Dollar (UUP) holding the $25.25 level of support. The test of the dollar has helped gold, oil and emerging markets reverse their downside move. The upside is still my bias for the dollar. move back above $25.75 is key move on Monday. Short euro if we reverse off support (EUO).

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.¬†Rally in stocks is bad for the bond short term.

Gold (GLD) attempted to clear the $115.25 resistance Friday. Reversal clearly in play, but for now long? Let the investors decide short term. $113 exit point on any trades. There is still too much speculating for the metal to gain any traction. On sideline for now.

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. I still think it is trading positions only for now with tight entry and exit parameters. No clarity for a trend to develop.

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 entry for trade?

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.

Biotech (IBB) tested 50 DMA. $356 resistance. need the sector to show investor belief going forward for growth to stay in play.

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.

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.

Europe (IEV) Tested the upside move¬†and never really 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. Beware of this moving forward. This is a long term position opportunity my view anyway and plenty of volatility to go with it.

“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:¬† Moved¬†higher and closed up slightly Friday with the breakout holding for now.¬†¬†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. In position to move higher short term.
  • 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:¬†¬†$15.70 level to clear for trade.
  • 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.