Morning report - Cautious optimism reigns

Strong durable goods numbers out of the US and tempting valuations saw a phenomenal bounce in all US equities.

This was particularly the case for high-beta growth stocks, so no surprise then that the IT and healthcare sectors led the rally. The S&P 500 closed at 1940, within arm’s length of 1970, which looks to be a key level in predicting how protracted this equity market correction will be. 

If the index experiences strong resistance at the 1970 level, it could be portending an extended period of lower stock prices for the market. William Dudley’s speech seemingly put to bed any prospect of September rate hikes, with the market pricing the probability of a rate hike at 24%. 

Attention will be keenly focussed on the speeches at the Jackson Hole Symposium, which begins tonight. However, I think the market will largely be looking towards December as the most likely date if a rate hike happens this year. Read more.

S&P 500 - New buy signal

S&P 500 got a new buy signal when it passed the resistance at 2094. And the long trend is still up.

S&P 500 has an important support area at 2060-2094.

S&P 500

 

The long trend is up for S&P 500.

At the more short horizon S&P 500 is oversold and has an important support level at 1972. Resistance at 2094.

COMP More Sell Signals To Come?

Nasdaq Composite index, COMP, has given several sell signal in recent weeks.

COMP breached several key support levels and it is now testing another important level at 2890.

If COMP falls below 2890 the next important level of support is at 2750.

Meanwhile, Apple is close to its crucial support level at 550-560. If Apple breaks that level will probably COMP almost certainly go below the 2890 level of support.

S & P 500 We Are Going Down..

S & P 500 has previously received sell signals and we assess the risk that large that the index should go down to at least about 1300 sooner or later.

The U.S. large-cap index, the S & P 500 went up last week by a marginal 0.6% and has thus risen by 9.6% this year.

S & P 500, which at this moment is in at 1378.53, has recently gained a lot of sell signals, and also shows other signs of weakness. The stock market has also entered a more volatile phase which means we can expect sharp changes both up and down on the S & P 500.

We are also in the middle of reporting season, which also contributes to individual stocks can move dramatically. Tomorrow after the close of trading, for example, Apple with its report, which can affect the stock market mood a lot. See also our analysis of Apple on April 17.

With today's poor purchasing managers report from Germany and the weak stock markets in the rest of the world S & P 500 will probably start the week with a serious downturn. We will now see whether the index will test support levels at 1358-1363 and 1340.

I have for some time aimed for S & P 500 to go down and test 1340 and most likely also the support level at 1 295.

In order to get some clearer buy signals S & P 500 has to close above the resistance at 1393 but above all the one at 1 422. It lokks like, however, that it will be relatively difficult for the S & P 500 to go over these levels in the near future.

The long trend for the S & P 500, defined as the slope of the 200-day moving average curve, is in itself upward, but the short-term trend is downward.

Stochastic and MACD indicators don´t invalidate the finding that there is a high risk on the downside for the S & P 500. Stochastic showed for example that the previous upward trend was significantly weakened in its final phase. This was the clear negative divergence against the index development.

I will therefore continue to try to go on S & P 500 on any upward move. Especially when the S & P 500 will come near any of its resistance levels. I will aim for a decline to 1340 in the first place and about 1300 secondary. Stop loss on the S & P 500 closes above 1 422 I will also move the stop loss down as the position shows a profit.

Then the S & P 500 is likely to remain volatile and swing a lot of up and down, it opens up for many great trading opportunities for the active investor.

If you use short-term strategies, it may therefore be a good idea to take home profits from time to time on short positions. Then you can go short again on upward moves in the market.

AAPL Sell Signals!

AAPL, Apple Inc, has got sell signals.

AAPL has broken its uptrend and has broken the support levels around 600-617. Now we are at the very important support level at 578. If AAPL break that level the stock looks like it could go pretty far on the downside.

AAPL also has important support levels around 548, 516, 487 and 428. I can´t rule out that AAPL may test the 428 support level sooner or later.

I will short AAPL on any upward move. Stop loss if close over 617.

S&P 500 Sell Signals

S & P 500 has received sell signals and is now in a downtrend. I will use rebounds to go short in the market.

S & P 500 has recently slipped from its previous upward trend. Instead, the S & P 500received lot of sell signals and other signs of weakness. Last week also resulted in a decline of 2% for the S & P 500.

So far this year, however, the S & P 500 has risen by about 9%. S & P 500 has also now entered a more volatile phase than earlier in the winter. This tendency for more volatility will probably be strengthened as we come into an intensive companies reporting period.

The long trend for the S & P 500, defined as the slope of the 200-day average curve is slightly upward. The short-term trend is, however, since last week downward.

Stochastic indicator shows that the market is oversold. The market may be oversold for a long time if it got into a strong trend so it's not a buy signal in itself. This indicates, however, that the S & P 500 is now relatively easy to get up recoil. These smaller gains can then for example be used to enter short positions at more favorable levels than otherwise.

S & P 500 got sell signals when the index broke an uptrend line that gave support at about 1400 and when the index went below the support levels around 1387 and 1378. Previously, the S & P 500 also had a negative divergence in the Stochastic indicator that strengthen the signal value of these sell signals.

We are now aiming for that S & P 500 sooner or later should test the support level at about 1340 and probably also the one at 1295.

Should the S & P 500 now would bounce upwards the index has resistance at about 1378, 1387 and about 1422. The psychological level of 1400 could also be considered as a resistance level.

For the S & P 500 to get some stronger buy signal in this mode, the index have to close above the resistance level at 1 422.

Then the S & P 500 is likely to be more volatile and swing a lot of up and down, open it up for too many good trading opportunities for the active investor.

If you trade with short-term strategies, it may therefore be a good idea to take home profits from time to time on short positions. Then you can go short again on upward recoils in the market.