Trade the leading stocks this week
Any pullback
coming into the end of the first quarter was expected to be shallow and so far
that is the case. The SPX declined from 1310.88
to the minor support level, making a 1295.81 intraday low on the 3/22/06 time
date. It closed Friday at 1302.95, +0.1% and -0.4% on the week. The Dow finished
the week flat at 11,280, while the QQQQ was -0.4% to 41.30 despite the SMH
gaining +1.7% for the week. From a trading viewpoint, it is mostly the commodity
and semiconductor stocks that provided the best opportunities. In addition to
the SMH, the OIH was +1.3% and XAU +1.4% on the week. The brokers, defense and
transportation stocks all remain above-the-line stocks and have also been
trader-friendly.
Last week was a holding action as the SPX traded
between 1306 – 1298 from Wednesday through Friday. This neutral holding action
is evident when you see that the net advances minus declines for the week was
just -54, with up-volume averaging 746 million vs. down volume of 694 million
(1.07 ratio). In addition to being the last five days of the first quarter, it
is also “opening day” for the new Fed honcho, so there will be more inane hype
than usual. Don’t get suckered into any upside hype into the quarter-end markup
this week. The SPX is already in the expected 1305 – 1385 Fifth Wave zone.
Have a good trading day,
Kevin Haggerty