Looking for Continued Strength in the NASDAQ

Red day ended the week on lighter volume. The VIX and VXN were rising on Friday, showing less complacency in the market.
We are well off that low from mid December. So Monday we’ll watch for early weakness and to see if the VIX/VXN start to drop, which is likely to be when we look for buyers. Early weakness will give the market a chance to find its footing and dip buyers to find bargains. Friday was pretty much inside bar or narrow range pause bars across the broader markets. We had been patiently awaiting the jobs data to move and we really didn’t get a lot of conviction off the news.

Monday look for the early weakness and to see if buyers step in. Financials are still telling me some downside could come in here which would pull the S&P 500 down. Oil will be key after last weeks drop, that represents about 10% of the S&P 500 with financials at 20.7%. The Nasdaq was leading nicely Thursday and Friday which is really what held the market up each day. So the watch for tech’s participation will continue. As earnings season kicks off this week, we can look for guidance to see where the growth will be and if tech can find some strength.

Gold fell hard this week down $31.10 on the week. Friday was down $19.30 to close at $606.90. Which was a rebound off the days lows at $603.00. GLD the gold ETF will be on the top of my watch list for Monday, nice support at 58.98 and 57.47 so it is time to pay attention to it. Crude also weak on the week closing down $4.74 from last Friday. Friday’s close was $56.31 down 72 cents on the day. We are seeing levels we haven’t seen oil at since June 2005.

Friday’s jobs data changed the odds of an interest-rate cut. The odds of the change dropped, the federal funds futures market showed. Traders were pricing in a 6% chance the Fed will lower its target for overnight rates to 5% in March, down from 14% late Thursday. The odds of a rate cut by June fell to 52% from 86%. The current interest rates in the U.S. is at 5.25%. The next FOMC (Federal Open Market Committee), meeting will be held Jan. 30-31.

Closing the week the dailies are looking right at the 50dma’s (50 day moving average). The Nasdaq composite and Nasdaq 100 are just barely holding over, also the shorter term moving averages are crossing through longer term. Chart below you can see the ma’s and placement. S&P 500 is testing the bottom of the channel and just over the 50ma like the Nasdaq. Moving averages are still in bullish order but the 10ma is very close to crossing through the 20ema. The Dow is still holding up well and still over the swing low, with some room still over the 50dma. While the others lurk just over the 50dma.

Economic Data released for the Week of January 8th — 12th Monday 15:00 Consumer Credit, Tuesday 7:45 UBS Store Sales, 8:55 Redbook, Wednesday 08:30 Trade Balance, 10:00 Wholesale Trade Inventories, 10:30 Crude Inventories, 12:30 Chi Fed Bank Pres. Moskow to speak, Thursday 08:00 NY Fed Bank Pres Geithner to speak, 08:30 Initial Claims, 10:30 Natural Gas inventories, 14:00 Treasury Budget, Friday 08:30 Export Prices ex-oil, 08:30 Import Prices ex-oil, 08:30 Retail Sales, 08:30 Retail Sales ex-auto, 10:00 Business Inventories.

Some Earnings for the Week of January 8th — 12th Monday pre market — LIFC, SCHN. Tuesday pre market — EMMS, ETP, LWSN, SVU and after the bell AA, RI. Wednesday after the bell — DNA, SAPE. Thursday pre market — INFY, MTB, SRR and after the bell CAMP. Friday nothing of interest. Still a fairly light week, but it will start to pick up now.

ES (S&P 500 e-mini) Monday’s pivot is 1428.50, the weekly is 1423.50. The support at 1416.50 held us right into the close. Even with the strength of the support at 1416.50 the market is tilting to lower ground. A move through 1416.50 we can look for 1413, 1408 1403 (will be key), 1400, 1391.75 support levels. Bouncing off 1416.50 the resistance to look for –1419.50, 1420.75, 1422.75-1423.50, 1425, 1427.75 and 1431.50. 60 minute chart is below.

ER (Russell 2000) Monday’s pivot is 783.30, the weekly is 787.20. Intra day support: 776.50, 775.50, 774.40,772.80, 771.30, 770, 769.60. Resistance: 782, 784.50, 786.10, 788.40, 790.70, 792.5, 794.00, 795.50 (fills open gap) and 798.30. 60 minute chart below

I hope everyone has a great week.

Teresa Appleton has traded equities and options for
nine years and futures for seven. She is founder and CEO of TradeLogic, LLC. For
more information about Teresa and the training she offers stock, options and
futures traders,

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