Tech Weakness Continues
Thursday ended the day in the red, but the story of the day is the “thumpin†the Nasdaq took.
Tech ran straight into red territory and stayed there all day, pushing the Nasdaq lower throughout the day. As we talked about earlier in the week the
Intel
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PowerRating) and Apple
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PowerRating) hits are hurting the tech side of the market. Financials held up throughout the day, but finally brokers broke and fell to close red. Banks managed to stay in a narrow range and closed green on the day. NYSE and Nasdaq volume increased (as expected) to give us another distribution day. That makes three consecutive distribution days on the Nasdaq this week and two for the NYSE. This shows there is participation in this downside move.
Crude closed down $1.76 at $50.48 a price we haven’t seen since May 2005. Inventory increased for the first time in eight weeks making for an easy fall down into $49.90 and a rebound back up to close at $50.48. Increased supply is still bearish and put pressure on crude throughout the day. Gold fell $5.20 on the day to close at $628.10. Due in part to the CPI data showing a strong economy and propping up the dollar.
As the markets corrective action continues and talks of a tech sell off continue to circulate,
we will just go with the facts and those are we did sell off and could still see additional downside. Earnings are flowing and so far half are upbeat and good forecasts while the other half maybe meeting but the guidance is hurting them. Which was the case for Apple and now we have IBM to add to the INTC, AAPL group. IBM fell in after hours to give tech even more worries. Looking primarily at the semi’s and keeping an eye on hardware and software sectors, the semi’s are looking the worst with the tumble this week. Even reaching short term oversold levels and with Friday upon us, we can look for some digestion in the sector.
Into Friday I expect the market to be on shaky ground. No that is not a technical trading term, but as most of you know I don’t care for a lot of that technical jabber. Sounding smart is not an issue to me, sounding as though I’m focused and looking at the market is. So tomorrow we look for some jitters off the opening, the tech fall is not setting well for the Semi’s , but the GSO (software) now sits at the bottom of its channel/support and the GHA (hardware) is at the 50ma and just over the swing low. Very critical levels for all three tech sectors. The financials are holding up well, but coming off the highs and seeing some pullback. Banks are winding in a small range and have all week, definitely due for a move and with the number of banks we’ve seen report this week I will continue to look for a break of this range. My bias into Friday is a bounce off the open, then to see things quiet down and continue this pullback. We are short term oversold is why I would like to see an early bounce, if we don’t see that we are likely to find range and do a lot of nothing. It will look like the interstate in an ice storm, everything sliding and getting no where.
Economic Data for the week of January 15 — 19 Friday 08:00 Fed Bank President Lacker will speak, 10:00 Mich Sentiment Prel/Consumer Sentiment, 10:30 Natural Gas report, 01:15 Kansas City Fed Reserve President Hoenig to speak
Some earnings due out for the Week: Friday pre market C, FAST, GE, KEY, MOT, SLB, STI and WL.
ES (S&P 500 e-mini) Friday’s pivot is 1435, the weekly is 1431.50. The ES weekly pivot that we’ve watched and waited for all week finally traded and tested today. Closing over the level and remember that was convergent with 38.2% support. So we’ve had an orderly pullback and now this 1431.25 held and will determine where we go. Intra day support: 1431.25, 1429.75, 1427.50, 1424 and 1421.25. Resistance to look for: 1435.50, 1437 (has given us grief all week), 1438.50, 1440.50 and 1443. 60 minute chart is below.
BKX (Banks) closed +.22 at 117.05. Support: 116.20, 115.32, 115.40 50dma. Resistance: 117.39, 118.02, 118.47, 119.05. Daily sector below
I hope everyone has a great 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.