Looking for Early Weakness to Start the Day

Thursday closed the day with the Nasdaq at six year highs. Dow with a new closing high (not all time intraday). S&P 500 also green on the day. Volume for the market was nice and steady throughout the day leaving accumulation days for the Nasdaq and the NYSE.

Crude fell for a fourth day down $2.14 to close at $51.88. This is a 19 month low and leaves the crude market to look at 50.00 as a psychological support. Gold up slightly today to close at $613.90 +.50 on the day. The dollar is still gaining strength so gold is staying pretty quiet and in range.

Last night we were watching the SOX and looking for a strong move into 78.6% (486.08). Well we hit that and the market started pausing and stalling around. Then eventually got around to pulling back into support and even lower once 38.2% was cleared on the broader markets. We know that without tech the Nasdaq cannot get far. Without the
Nasdaq the other markets cannot get far. Therefore this is a very important part of the picture. Going into Friday we have a fair amount of market moving economic data and we have to be watchful of the Semi’s. The banks are also not as strong as the brokers, which is pulling the S&P 500.

Banks and brokers are both the “financials” that are 20.7% of the S&P 500. One being extremely powerful (brokers) and one being weaker is a problem. It is the two steps forward and one step backward dance step. Because I’m not a Dancing with the Stars professional, it makes for a lot of stepping on toes. Which in English means the S&P 500 is having trouble following through. That now with the short term overbought condition of the brokers will leave Friday on edge. Tech is also 14.3% of the S&P 500, will be important with the SOX hitting the 78.6% brick wall. So early on we look for weakness and a pullback to correct this move. Then for the buyers to visit us. It has been a wild week so the buyers maybe waiting for next week to do a lot other than hold us from falling far. Also keep in mind the markets are closed Monday (Martin Luther King day) so it is a long weekend. Desks will clear early and things are likely to be quiet by the afternoon.

Economic Data released for the Week of January 8th — 12th
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, 2:00 Treasury Budget.

Some Earnings for the Week of January 8th — 12th Friday nothing of interest. Still a fairly light week, but it will start to pick up now.

ES (S&P 500 e-mini) Friday’s pivot is 1430.25, the weekly is 1423.50. The ES double bottom shot out of a canon off the opening and never looked back. The measured move 1437 missed completion by 1.25 and still could see that into Friday. Very bullish tone for the futures market today. A move through 1437 would look for 1440 and onto 1444.25. A pullback through 1426.75 would likely result in a move to 1417.25. Intra day support: 1426.75, 1424, 1421.25, 1419.25 and 1412.25. Resistance to look for: 1434.25, 1435.75, 1437, 1440 and 1444.25. 60 minute chart is below.

Everyone have a great three day weekend.

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,

click here.