Off the Charts
There was follow-through downside action to yesterday's weaker close. The S&P 500 closed the day down 0.49%, the Nasdaq was down 0.49% and the Dow Jones Industrial Average lost 0.54%. So far, the S&P has experienced the usual type of corrective action since the rally began on Dec. 20 -- Gap and Go. The S&P broke below the 10-day moving average, but held support of the 20-day moving average. The question is whether this will time be different. Will we see the 50-day moving average get tested? Recently, more groups broke macro trends, whereas before they found support at the accelerated uptrend.
For now shorts have been covered, however, not ready to start buying back stock as risk has been pared down into the end of the first quarter since it is uncertain what the composure will be as most of the time; the action is different from quarter to quarter.
SPY
Source: eSignal
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Strong stocks stayed strong.
Apple (AAPL) remains a leader as it continues to soar to new all-time highs. This has been a very impressive stock this quarter as all eyes are on this ticker. This stock is extended from the prior buy price of $609.56 earlier this week and could use a rest. AAPL opened the year at $409.40 and is currently 33% higher. Impressive!
AAPL
Source: eSignal
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Google (GOOG) has regained composure lately after its earnings miss this quarter -- a positive sign going forward. Even in the weakness in the last day and a half, this stock remained strong. GOOG is currently above the price it opened this year, which was $652.94. The macro target of $750-plus is still intact for 2012.
GOOG
Source: eSignal
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JP Morgan (JPM) remains strong as the first quarter comes to an end. JPM opened 2012 at $34.06, and is currently up 26%. The 10-day moving average continues to provide support for this stock as it climbs higher. The Financials outperformed in the first quarter. Will this be the case in the second quarter?
JPM
Source: eSignal
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Wells Fargo (WFC) is another leader in the Banks as it trades at yearly highs and above all key moving averages. WFC opened at $27.94 this year and is currently up 18%. Technically speaking, this stock is showing relative strength to other banks like Morgan Stanley (MS) and Bank of America (BAC), which had decent percentage gains for this quarter, but lagged technically.
WFC
Source: eSignal
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When stocks show Relative Weakness when the market rallies, they tend to get hit the hardest when the market is under pressure.
The S&P 500 closed the day down 0.49% whereas Freeport-McMoRan (FCX) closed the day down 3.59%. This stock has been highlighted for some time as a weaker stock as it broke uptrend support several sessions ago and was consolidating below that level. Today, FCX triggered below $37.75, the break of the tight range and continued lower. This stock is below key moving averages and not at any compelling levels of support to test a buy. The trend remains to the downside, and the stock could be shorted on a bounce.
FCX
Source: eSignal
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Schlumberger (SLB) opened the year at $70.40, and is currently trading below that level, whereas the S&P is 10% higher from where it opened the year. The Market Vectors Oil Services ETF (OIH) and its components have bounced from the lows of 2011, but saw no true traction to the upside in the first quarter. Will the second quarter be different for this group? It will be key to judge composure after earnings in the second quarter.
SLB
Source: eSignal
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Industrials was hit hard today on negative durable goods order data.
Caterpillar (CAT) started the year strong and showed relative strength for most of the quarter. But, it started to experience short-term pressure in March, as it broke the upper level.
CAT
Source: eSignal
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Deere (DE) has been showing relative weakness to sector counterpart CAT, as it broke upper levels of support first. It is now coming into a critical level of support. It broke out from $78 to $79 earlier this year. Will this level hold since the pattern is looking a little more bearish?
DE is only $0.50 from where it opened the year, while indices are up 10%-plus.
DE
Source: eSignal
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It is has been a strong first quarter for the market, and if you've enjoyed success along with the indices, it is ok to take a step back over the next few days. We often see window dressing at the end of a quarter, and we could get some of that action through Friday. Take this time to start evaluating your performance in the first quarter, which is an important part of your continued development as a trader or investor.
At the time of publication, Redler was long ZNGA, CZR.