After having the worst week on Wall Street since June, investors have officially deemed this a "bear" market and have already begun to start digging trenches in their backyard to bury cash. But not so fast, for those of us familiar with the Dow Theory this may just be the perfect time for intermediate investments; portfolio additions to hold until the end of the year or so. The Dow Theory tells us that the market has 3 main movements - 1) a "primary" movement (June - October), 2) a medium swing that retraces 33-66% of the primary move (the last 6-8 weeks), and 3) the final "short swing."
It is in my opinion that last week was the end of the "medium swing" that retraced about 48% off of the June 4th lows of 1266 on the S&P's. That being said, through extensive research I have found that many of the stocks I track are at prior support levels that may prove profitable in the short term (AAPL, IBM, LNKD, M, TGT, etc.) This proves true for our market sector analysis as well. Agribusiness (MOO), Utilities Select (XLU), Financials (XLF), Homebuilders (XHB), etc.
The S&P index closed Friday at 1379.85, about a point below the 200-day SMA (1380.98). Friday's low is 1373.03, and, in my opinion, is the line in the sand for any long positions that will be initiated this week. If SPX cannot reclaim the 200-day by Wednesday or Thursday, I think we could see 1360 before we see 1400.
My main focus this week will be on the financials and home-builder's sector, as they have led the way in the past few weeks as the market has deteriorated Many of the home-builder's also have earnings this week (BZH, DHI, HD) - something that must be on our radar throughout the week.
One thing that I feel that has gone almost unnoticed lately, is the Dow Transports (DJT). The transports have been range-bound since the beginning of the year, and may be a leading indicator for the remainder of the year - if they break their range (5,000- 5,200). If it cannot hold the 5,000 mark, we may be in bad shape -- but keep a close eye on the transports.
Last but not least, a weekly report would not be complete without an outlook on Apple. I've always been told "when there is blood on the streets, it's time to buy." While I hate such a generalized phrase, I think this may finally be well attributable to the current state of Apple. On Friday, we had a quick reversal at the 535 area, something day-traders thrive on, as shorts are forced to cover. In short, I feel that the 6-week blood bath may take a breather and a quick snap back is due. Day-traders, stay on your toes, this could be a very profitable couple of days. All in all, I see AAPL closing above 560 this week (see here).
Check out the Opening Bell Analysis for a list of stocks that I'll be watching this week, and the levels I'll be trading.
Stay focused,
Team Elite
It is in my opinion that last week was the end of the "medium swing" that retraced about 48% off of the June 4th lows of 1266 on the S&P's. That being said, through extensive research I have found that many of the stocks I track are at prior support levels that may prove profitable in the short term (AAPL, IBM, LNKD, M, TGT, etc.) This proves true for our market sector analysis as well. Agribusiness (MOO), Utilities Select (XLU), Financials (XLF), Homebuilders (XHB), etc.
The S&P index closed Friday at 1379.85, about a point below the 200-day SMA (1380.98). Friday's low is 1373.03, and, in my opinion, is the line in the sand for any long positions that will be initiated this week. If SPX cannot reclaim the 200-day by Wednesday or Thursday, I think we could see 1360 before we see 1400.
My main focus this week will be on the financials and home-builder's sector, as they have led the way in the past few weeks as the market has deteriorated Many of the home-builder's also have earnings this week (BZH, DHI, HD) - something that must be on our radar throughout the week.
One thing that I feel that has gone almost unnoticed lately, is the Dow Transports (DJT). The transports have been range-bound since the beginning of the year, and may be a leading indicator for the remainder of the year - if they break their range (5,000- 5,200). If it cannot hold the 5,000 mark, we may be in bad shape -- but keep a close eye on the transports.
Last but not least, a weekly report would not be complete without an outlook on Apple. I've always been told "when there is blood on the streets, it's time to buy." While I hate such a generalized phrase, I think this may finally be well attributable to the current state of Apple. On Friday, we had a quick reversal at the 535 area, something day-traders thrive on, as shorts are forced to cover. In short, I feel that the 6-week blood bath may take a breather and a quick snap back is due. Day-traders, stay on your toes, this could be a very profitable couple of days. All in all, I see AAPL closing above 560 this week (see here).
Check out the Opening Bell Analysis for a list of stocks that I'll be watching this week, and the levels I'll be trading.
Stay focused,
Team Elite
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