These Are Support Levels You Need To Know
Gaps and reversals, reversals and gaps. I
feel like I am watching The Rock vs. Stone Cold Steve Austin at Wrestlemania.
The market is just one big giant fight right now. I am simply amazed by all the
crosscurrents that occur on a daily basis. Very simply, this remains one of the
toughest tapes I have ever experienced. It was easy when the market was going
straight down. Right now, it is whipsaw city. BUT…if you can look deep enough,
it is possible to stay ahead of this game. All you have to do is look through
3000 charts over the weekend like I do. Hey…I never said I was normal.
The good news is that I am seeing some things sticking out like a sore
thumb…but before I move forward, please remember, the markets, in the short
run, will continue to be dictated by news in the Middle East…and it is
probably better to take it slow right now.
I am a big believer in watching price and volume. Price action always takes
precedent with volume running a close second. Just about every big move you will
see in the market, both up and down, occurs with a huge influx of volume. Right
now, the two are not going hand in hand.
Volume action has been terrific. Since the lows, the market has had only heavy
volume days to the upside and low volume days to the downside…just the way you
would want it. But…price action is starting to worry me…and you had better
be watching.
While many pundits are calling this rally a new bull market, I am seeing it
differently. As I told you last week, I thought the market was due for a
pullback…but I am starting to think it could get worse. First off, I am
noticing that many important big-cap TECHNOLOGY
names look to have topped. Take a gander at charts of
Oracle
(
ORCL |
Quote |
Chart |
News |
PowerRating), Microsoft
(
MSFT |
Quote |
Chart |
News |
PowerRating) and Cisco
(
CSCO |
Quote |
Chart |
News |
PowerRating). You tell
me what you think. Add in the possibility that the always important
SEMICONDUCTOR group may have topped…and
you may get a market that has been led by TECH, go on defense very quickly. I
have always told you to watch the SEMIS as they have been leading the market up
and down for many a month.
Sentiment is also not
exciting me. BULLISH advisors have jumped up to 47% while BEARS have dropped to
33%. As I have told you a thousand times, this “wrong-way crowd” never gets it
right. On top of that, the VIX and VXN have dropped back to very complacent
levels…and just to make matters a wee bit worse, I heard a half dozen
strategists say they loved the
(
QQQ |
Quote |
Chart |
News |
PowerRating) for this year. Maybe that has to do
with the fact that the NASDAQ 100 has BEEN
leading.
GOLD also may have bottomed. Needless to
say, GOLD moving up has coincided with the markets moving down.
Nevertheless, here are support levels you need to know. All you bullish maniacs
need to pay close attention to them. Shorter-term, 8100 DOW with next support at
the 50-day average, approximately 7990…the S&P 500 at 858 short-term, and more
importantly, at approximately 848…its 50-day average. You would not want to
see the NASDAQ 100 violate its breakout at 1024. As long as these levels hold,
no sweat. A break below and…I will let you fill in the blank.
On the positive front…you didn’t think I would only talk negatives…I am
seeing constructive action in several areas. First and foremost,
INTERNET continues to lead. Names like
eBay
(
EBAY |
Quote |
Chart |
News |
PowerRating),
Amazon
(
AMZN |
Quote |
Chart |
News |
PowerRating), and Yahoo!
(
YHOO |
Quote |
Chart |
News |
PowerRating) continue to do well, but are now extended and should only be bought
on pullbacks. Other sectors acting well are REITs,
GAMING, BIOTECH
and OIL and GAS. I would also continue to
pay attention the yearly NEW HIGH LIST as there continues to be a decent amount
of good-looking breakouts each week.