Continue to Watch the Banking Sector
Wednesday ended the day with modest gains on light volume. Pre market retail sales gave the market reason to rally early, only to be sold off. Now good economic data and any signs of a strong economy will give the Fed reason to increase rates. So we stay in a data dependent state of mind and watch every reaction to news.
Crude closed the day up 35 cents on the day to close at $61.37. Weekly inventories showed another drop this week. Which gave the oil market a boost. OPEC is meeting Thursday to determine if there should be a supply cut, most analyst are expecting a cut. This could pressure cost oil prices into Thursday until the news is released. Gold also continued it rise closing up 70 cents at $632.40. Inflation concerns are center stage giving gold support. CPI on Friday will be closely monitored with gold.
The Nasdaq Composite, Nas 100 and the Dow are still in symmetrical triangles, while the S&P 500 sits just off the November 2000 highs. The semiconductor sector broke through the 50dma by a hair and now sits just over the 200dma. Continued weight from tech will push the Nasdaq down out of those triangles. Banks hit an all time new high today and also closed at an all time new closing high. Brokers fell again today and now
Bear Sterns
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PowerRating) and Lehman
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PowerRating) both report so we’ll continue to look at that sector. Financials make up 20.7% of the S&P 500, so those two are critical for direction on the SP’s. Banks are performing well still and propping the S&P up, we need to keep a close eye on this sector.
Thursday like Wednesday will kick off the day with pre market economic data. The data will likely set the tone for the day. We should however see more range expansion than we saw on Wednesday. As quadruple witching week nears an end. Usually Wednesday and Thursday along with Friday are the high volume days during expiration. That was not the case for Wednesday, so high expectations for Thursday and Friday’s volume along with volatility. Because tech (semi’s) are not participating in this upside move I am still suspect and Wednesday’s light volume rise is another red flag for me. So downside still seems possible as the market awaits Friday’s CPI.
Economic data for the Week: Thursday 08:30 Export Prices ex-ag., 08:30 Import Prices ex-oil, 08:30 Initial Claims, Friday 08:30 CPI, 08:30 Core CPI, 08:30 NY Empire State Index, 09:00 Net Foreign Purchases, 09:15 Capacity Utilization, 09:15 Industrial Production.
Some earnings for the Week: Thursday pre market — APOL, STST, BSC, COST, LEH, WGO and after the bell — ADBE, TEK, VSTA. Friday nothing of interest.
ES (S&P 500 e-mini) Thursday’s pivot is 1426.75, the weekly is 1421.25. The chart below, as I pointed out last night we still have two possible patterns, unfortunately one is bullish and the other bearish. Let’s start with the bulls, possible double bottom confirmed with a move over 1429.25 and the measured move would be 1442.25. The bears are looking at this possible inverted cup and handle (with a side car handle now), break of 1416.25 puts it in motion. The measured move is 1400.50. Intra day Support: 1425, 1423.75, 1419.75, 1416.25 and 1412. Resistance: 1428.25, 1429.25, 1432, 1436.25, 1442.25 and 1447.75. 30 minute chart is below.
SOX (Semiconductors) closed —5.82 at 467.01. Support: 465.11 200dma, 463.84, 461.27. Resistance: 476.47, 479.67, 485.29, 487.44. Daily chart below, green line is the 50dma and the dark blue is 200dma
BKX (Banks) closed +.38 at 115.69. Support: 114.06, 113.80 50dma, 112.72, 111.71. Resistance: 115.81, 116.58, 116.97, 117.84 . Daily sector below
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