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Technical Analysis : Week 14/09
March 30, 2009
Last week the S&P500 Index closed at 816. This represents a jump of 47 points (6.1%) off the previous week’s close. Last week also marked 3 consecutive weeks up for the S&P500 Index.
Last Monday, the market had a major gain thanks to the announcement from the Treasury Secretary, Tim Geithner’s plan to buy up $1 billion of toxic assets from the banks. After the Monday gain, the market basically went flat for the week with Tuesday and Friday down.
Looking at the weekly candles, the S&P500 Index suggests a positive week ahead. This is because last week’s candle did not show any weakness or doubt after a positive run. The market has successfully established higher highs and higher lows for the past three weeks.
Looking at daily candles, the S&P500 Index looks like it will continue its sideways consolidation between the range of 800 to 825. This consolidation will be a welcomed message for the market as it prepares to launch another upside run from the 800 levels. This will make the 800 levels for the S&P500 Index as a very crucial level.
All the previous 3 immediate resistance levels were breached last week. However the S&P500 Index failed to close above the R3: 825 except on Thursday.
The immediate support levels now are S1: 800, S2: 775 and S3: 750.
The immediate resistant levels are R1: 825, R2: 850 and R3: 875.
The dollar index (DXY) made a reversal for the week with a mini run from 83.7 to 85.14 with a major run on Friday. The price action suggests that investors and traders are likely to cash out on profits gained from the equity market. Gains from the equity market are likely to flow back into the dollar, gold and other safe-havens for a period of time.
In summary, this coming week should consolidate with the last 2 days of March ending down and the rest of the week possibly getting back its early week’s losses.
Stat 1: The last week of March, for the past 50 years, have reliably closed badly.
Stat 2: Since 1978, only 9 of the last 30 years had bearish Aprils; 1981, 85, 87, 90, 93, 2000, 02, 04 and 05.
Stat 3: The S&P500 is currently sitting below the shoulder level of its 12 year Double Top.
Stat 4: The end of April ends the best 6 months for the Dow Jones Industrial Average and the S&P500 index which traditionally start at the end of the previous October.
Sector Rotation : Week 14/09
March 30, 2009
It has been another wonderful week for most of the sectors. Last week, Industrials led the sectors for the first time this year with 3.38% followed by Materials (2.23%), Consumer Discretionary (1.21%), Consumer Staples (0.65%), Health Care (-0.61%), Technology (-0.69%), Utilities (-2.01%), Financials (-3.54%) and Energy (-4.45%).
Last week, the Industrials, Materials and Consumer Discretionary sectors took top spots. The increase in stock prices in these 3 sectors is likely to provide a boost for investor’s confidence as the market is seen as attempting to stabilize the economy for the moment.
Most of the sectors for this coming week are likely to consolidate after 3 consecutive weeks’ gain. Health Care is the most probable candidate to resume its uptrend as it did not really participate in last week’s run up.
The Industrials, Materials, Consumer Discretionary and Financial sectors are going to be quite volatile for the coming week. Most of the economic data will directly affect these 4 sectors. Financials and Housing will be the most volatile amongst the rest of the sectors.
23rd - 27th March
|
Consumer Discretionary |
XLY |
1.21% |
|
Consumer Staples |
XLP |
0.65% |
|
Energy |
XLE |
-4.45% |
|
Financial |
XLF |
-3.54% |
|
Health Care |
XLV |
-0.61% |
|
Industrials |
XLI |
3.38% |
|
Materials |
XLB |
2.23% |
|
Technology |
XLK |
-0.69% |
|
Utilities |
XLU |
-2.01% |
Market Analysis : Week 14/09
March 30, 2009
The market continued its good run from the previous week starting with a big bang on Monday. It then paused on Tuesday after the previous day’s huge gain. Wednesday saw the market make a superb comeback in the last hour of trading after selling off for most of the day. Then the market repeated the same Monday-Tuesday pattern on Thursday and Friday.
Last week marked the 3rd consecutive positive week for the year stretching back to last April on the Dow and back to last August for S&P500 and Nasdaq. The Nasdaq Composite Index closed up positive for the year on Thursday but failed to hold the gain on Friday.
The market breath was very positive except for Tuesday. This was because of profit-taking after Monday’s massive gains. The positive market breath will aid investor confidence in the coming week and month.
Economic Data
There will be plenty of economy data in the coming week (30 Mar – 3 Apr). With no significant news or data on Monday, investors and traders are likely to consolidate their positions, profit take and brace themselves for the rest of the week.
On Tuesday, three key economic data are expected, amongst which are the closely watched Consumer Sentiment Index and the Chicago PMI.
Wednesday brings a plethora of numbers starting with the ADP Non-Farm Employment Change, ISM Manufacturing PMI and Pending Home Sales report. The Pending Home Sales and ISM Manufacturing PMI reports are expected to show slight improvements due to lower mortgage rates and an increase in durable goods sales.
On Thursday, the G20 Meeting will dictate the direction for the day. Economic data such as Unemployment Claims, Factory Orders m/m and Natural Gas Inventories will be released too. Market players will be watching the Unemployment Claims closely.
On Friday, employment data will dominate the day’s proceedings with Non-Farm Employment Change at the forefront, Unemployment Rate and Average Hourly Earnings m/m. The other important economic data will be the ISM Non-Manufacturing PMI. Toward the 2nd period of the trading session, players will turn their attention to Fed Chairman Ben Bernanke as he speaks about the Fed’s balance sheet.
The market is likely to pause on Monday and Tuesday with some profit taking expected. Investors and traders are likely to consolidate their accounts in anticipation of the coming Q2 and a new earnings season next week. The upward momentum is likely to continue towards the end of the week with the focus on the G20 meetings and Friday’s economic reports.
Foreword : Week 14/09
March 30, 2009
We are going to into the transitional week between March and April with an improved feeling. Last week, the Dow Jones Industrial Average rose 497.8 points to close at 7776.18 (6.8), The S&P500 Index gained 47.4 points to close at 815.94 (6.1%) and the Nasdaq Composite was up by 88 points to close at 1545.2 (6%).
Mar ‘09 - Homebuilders Report
March 27, 2009
Real Estate, Housing and Construction - pillars of any developed economy and reliable indicators of an economy’s financial health.
For the March Issue of the Special Report, our focus is on this, our most promising sector for the long term investor. The benchmark index of this sector is $HGX (PHLX Housing Sector Index). Short term investors and traders may get a nice kick in the coming weeks and months as this sector is starting to looking very promising indeed.
Besides the Housing Sector, we’re also going to look at all the other related sectors and industries that have been beaten down when they should not have been. These sectors hold great opportunities for growth over the next decade as we come out of this downturn.
Technical Analysis : Week 13/09
March 23, 2009
Last week the S&P500 Index closed at 768.54 levels. This represent a jump of 12 points (1.5%) off the previous week closed. Last week also marked a consecutive 2 weeks up for the S&P500 Index. Last Monday had a paused after a 4 positive days. The market continues the uptrend for 2 days after the pause and followed by the downtrend for the last 2 days.
Looking at weekly candles, the S&P500 Index suggests a flat or down week ahead. This is because the S&P500 index has not have a 3 consecutive up weeks since last April.
Looking at daily candles, the S&P500 Index seem like it will continue the downward movement to the support level of 750.
The R1: 775 had been breach but R2: 800 had held quite strongly as the S&P500 Index tested on twice occasion on Wednesday and Thursday. The R2: 800 will be a nasty resistant to break for the coming week.
The immediate support levels are S1: 750, S2: 725 and S3: 700.
The immediate resistant levels are R1: 775, R2: 800 and R3: 825.
The dollar index (DXY) continues the downtrend of the previous week at 83.70. The price action suggest that more money will continue to flow out of the investment of dollar and it will likely to flow out to gold, equity or commodity market.
Overall the market will likely to be flat to the downside unless there are promising news from the government and the economic data.
Sector Rotation : Week 13/09
March 23, 2009
It has been a fruitful week for most of the sectors. Utilities lead the gain with 4.49% followed by Consumer Discretionary (4.27%), Technology (3.23%), Materials (2.32%), Energy (2.31%), Financials (1.37%), Industrials (-0.29%), Health Care (-1.34%) and Consumer Staple (-1.48%).
Previously …
“According to price action, there are 3 sectors that are very interesting. These sectors have just visited last year’s low and closed slightly above it this week. These sectors are Consumer Discretionary, Health Care and Technology.”
Last week, Consumer Discretionary and Technology continued to show strength in the market while Health Care sector has a dipped. This coming week, Health Care will likely bounce up following a dip last week while Consumer Discretionary and Technology might just have a dip because of profit taking.
This week the Homebuilder sector will be in focus as the Existing/New home sales are going to release on Monday and Wednesday respectively. Last week the Fed has gave an extra boost to the Housing sector by buying up the mortgages. The action of the Fed will reduce the mortgages rate and this will likely to spur action from the buyer and seller in the housing market. Furthermore, the homebuilders have seen an improvement in home sales in the pass few weeks.
Last week drop on Thursday and Friday represents an opportunity for the buyer in the first few days of the coming week. However, the buyer will be cautious and they will be watching the economic data and the “toxic” plans on Monday to set their tone for the weeks.
Therefore the Financial and Housing sectors are likely to get the biggest boost if the news on Monday promises to be great.
16th – 20th March
|
Consumer Discretionary |
XLY |
4.27% |
|
Consumer Staples |
XLP |
-1.48% |
|
Energy |
XLE |
2.31% |
|
Financial |
XLF |
1.37% |
|
Health Care |
XLV |
-1.34% |
|
Industrials |
XLI |
-0.29% |
|
Materials |
XLB |
2.32% |
|
Technology |
XLK |
3.23% |
|
Utilities |
XLU |
4.49% |
Market Analysis : Week 13/09
March 23, 2009
The market continued its upward momentum gaining from Tuesday and Wednesday, and made a correction on Thursday and Friday. Small gains throughout the three major indexes in last week provided hope for the investors for further upside rally. Last week marked the first consecutive positive week for the year stretching back to last August.
The market breath for last week was rather mixed. On Tuesday and Wednesday the market breath was quite healthy with good advancer/decliner ratios. On Thursday and Friday the market breath was good too but for the decliner or the bear. The price action from last week pointed to a rather mixed direction for the coming week especially with Friday’s sell off on convincing volume.
Last week the Fed flooded the market on Wednesday with $1.5 billon to save the mortgage market. This is likely to inflate the economy in the future.
Looking forward to the coming week, the market will likely be volatile as it awaits treasury secretary, Geithner to unveil the details about the government’s latest plan to help rid banks of toxic assets clogging the financial system. This week is also full of important economic data such as the New/Existing Home Sale, Unemployment Claim, Final GDP q/q and others. Based on historical data, the last week of March will likely be bad or underperforms the rest of the March weeks.
This coming Monday will be crucial as it will set the trend for the week of the market. Another crucial day will be coming on Thursday, as the last 2 quarters of the Final GDP will be release. The Investors will be watching these 2 days closely to decide the health of the economy while traders will continue prevail and dominate the market (while investors stay sidelined).
Based on the previous news announcement by the treasury secretary, the market tends to react negatively. The market has not been up for 3 consecutive weeks since last April. Overall we expect the market to be flat or slightly to the downside for the week.
Foreword : Week 13/09
March 23, 2009
We are going into the fourth week of March with mix feelings. Last week the Dow Jones Industrial Average rose 55 points to close at 7278.38 (0.7%), the S&P500 Index rose 12 points to close at 768.54 (1.5%) and the Nasdaq Composite was up by 26 points to close at 1457.27 (1.8%).
Technical Analysis : Week 12/09
March 16, 2009
This week the S&P500 closed above the key resistant level of 750 points at 756.55. This represent a jump of 73 points (11%) off the previous week closed. This week also mark the 5th Candle Reversal pattern for the S&P500 Index. There are 4 positive days in this week starting from Tuesday.
Looking at the daily candles, the S&P500 index suggest a pause towards the uptrend for the next few trading days. This is base on the Hammer candlestick pattern on Friday. Looking at weekly candles, the S&P500 index suggests a pause or down week ahead. This is because the S&P500 index has not have a 2 consecutive up week since last August and April. Furthermore, the 2nd up week in April is representing by a Hammer and in August is an upside Doji candlestick pattern.
The immediate resistance levels of 700, 725 and 750 have been broken in this week. The break above of these major resistance required the 2 major bull days that are MIA (missing in action) for the pass few weeks. Thus these resistant will be acts as the major support level going into next week trading.
The immediate support levels are S1: 750 followed by S2: 725 and S3: 700.
The immediate resistant levels are R1: 775 followed by R2: 800 and R3: 825.
This bear market rally is looking pretty convincing, as it is clearly shown in the 4th consecutive up days in this week. Furthermore, the huge gain on Tuesday and Thursday is followed through on Wednesday and Friday respectively. This bear market rally is not only fuel by the short seller, which they have to cover their shorts and it is also back by the true buyer, which search for bargain stocks.
“The only positive note this week is that the market surged higher for the last hour of trading on Friday to close positive. The market action on Friday’s closing represents a sense of confidence (it was not short covering) by investors by parking money for the weekend - something that has not been seen for a while.” Technical Analyst from previous week
Big institution players have been actively in the market for the pass few days. This is clearly shown by the up surging market action in the last hour of trading.
The dollar index (DXY) continues to fall in this week ending at 87.25. This suggests the continuity of the outflow of the dollars from the currency market, which will likely translate into an influx of the dollars into the equity market.
Will the coming week welcome a new mini bull or another disappointing false bull?
Having said that, expect another volatile week, as the Fed Chairman Bernanke will be making several appearances on the screen even before the start of the trading week.
