Why the semis could lead the market higher

Monday with holiday plagued volume, still gave some nice trading opportunity.
Very light volume and a narrow range did not really alter where we left off Friday. Definitely a pause day and normal holiday type action. Crude closed down 20 cents at $59.96. Gold closed up $5.60 at 582.40. N. Korea probably contributed to that nervous market and lifted gold. Bonds were closed so that is also why things were quiet today. After the bell today we were hearing that Saudi will cut production so watch for that tomorrow.

Tuesday we can look for an early pullback and a move for the bulls to buy. Each dip has been bought and the market will start positioning for earnings. AA is the first Dow component to report and they are after the bell. Semiconductor stocks are showing some life, the chart below you see the semi’s at the top of the triangle, a break here should leave room for movement. Tech has been lagging holding the Nasdaq and this could change that and fuel the bulls. Failure here would be quite ugly for the market, but don’t start top picking. Financials were strong again today leaving the market to wonder if brokers or banks will ever come back…they will but WHEN? Definitely is strengthening the S&P 500 and now we just will see if the semi’s ignite here.

Few semi’s that can be watched if the sector breaks out: SMTC, ISIL, ADI. Any weakness look at CY, Friday it left a huge reversal candle, but Monday’s action left an inside candle, some pause for a move still to come.

Some earnings for the week of September 9-13th Tuesday pre market JBHT, QMED and after the bell AA, DNA. Wednesday pre market FAST, INFY, MTB, PGR and after the bell LRCX, RI, YUM. Thursday COST, GENZ, MTG, PEP, PII, WGO and after the bell CAMP. Friday
pre market GE.

Economic data for the Week of October 9 — October 13
Tuesday 10:00 Wholesale Inventories, 14:00 Treasury Budget, Wednesday 10:30 Crude Inventories, 14:00 FOMC Minutes, Thursday 08:30 Initial Claims, 08:30 Trade Balance, 14:00 Fed’s Beige Book, Friday 08:30 Export Prices ex-ag., 08:30 Import Prices ex-oil, 08:30 Retail Sales, 08:30 Retail Sales ex-auto, 09:50 Mich Sentiment Prel., 10:00 Business Inventories.

ES (S&P 500 e-mini) Prior weeks data: H= 1363.25, L=1336 and C=1358.75. Weekly pivot and support/resistance data: PP=1352.75, R1 1369.25, R2=1380 R3=1407.25 and S1=1342, S2=1325.50, S3=1298.25. Pivot for Tuesday is 1358.75. Support 1358, 1356.50, 1354.25, 1352.50, 1350.50, 1347.50. Resistance 1360.75, 1363.25, 1365.75, 1367.75, 1369.25. As I said last night we would likely fill the gap and stay in range, we did just that. Pretty quiet day overall. So now Tuesday lets look for some pullback to start the day off to let folks on board and for the bulls to come in again. We have no reason to think anything other than buy the dips still. Do keep in mind the weekly pivot is 1352.75 and we are 4/4 for seeing that on Monday or Tuesday, we did not drop that low Monday so watch for that retracement into Tuesday. A pullback lower than that would likely signal lower ground. But until then we’ll call that our corrective pullback and look for the bulls.

SOX (Semiconductors) closed +5.07 at 456.39. Support: 447.72, 443.81, 439.38. Resistance: 458.63, 460.35, 464.77, 467.11.

Good Trading to everyone!

Teresa Appleton has traded equities and options for
nine years and futures for seven. She founder and CEO of TradeLogic, LLC. For
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