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FOR THIS WEEK'S POSITION TRADE NEWSLETTER
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Daily
Editorial: |
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Market Continues to Fall After Wednesday's
Rate Hike
Good morning!
The market had another tough day on Friday. As expected, the S&P
500 and Dow Jones Industrial Average, which were not subject to the
earlier selling seen in the Nasdaq Composite, had the most difficult
time. Both put in a second trend day in a row, albeit a more choppy one
than Thursday's, while the Nasdaq saw selling early on and then fell
into a range throughout most of the day. Nevertheless, the Nasdaq also saw a significant loss, despite
the day's range, shedding 28.92 points. The Dow lost 119.74 points on the day, while the S&P 500
fell 14.68 points.
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Friday began without
much excitement, opening with a slight gap down. The 9:45 ET reversal
period helped pull the indices higher, bringing them into their 5
minute 20 sma resistance as the next reversal period of the day hit at
10:15 ET. By this time the indices were already experiencing the more
choppy, pivoting action we were watching out for, but the range was
fairly narrow, allowing that range to break somewhat lower for the next
thirty minutes of the day. Once more the reversal periods held well and
the 10:45 ET one took the market off the new intraday lows and into
another trading range over noon.
The market continued to favor pivot trading
for the remainder of the day, even though the S&P 500 and Dow still
made new lows in the afternoon. The indices bounced back and forth
holding the intraday support and resistance levels very well. The 15
minute 20 sma resistance served to break the S&P and Dow down off
the 12:00 ET reversal period, taking them to their first new lows of
the afternoon, while the Nasdaq also fell off the same resistance, but
held the morning lows to pivot back higher into 13:00 ET.
The 15 minute 20 sma held again in the
S&P and Dow, while prior highs held in the Nasdaq. In between, on a
smaller time frame, was a small scalp pattern with a Phoenix coming out
of a cup with handle out of the 14:00 ET reversal period, but the
remainder of the day was once again very choppy and difficult. This
second afternoon move off the 15 minute 20 sma was the last pivot high
of the day and the indices moved gradually lower into the close. The
S&P and Dow once more made a new low, while the Nasdaq still held
prior lows.
While Friday
was favorable for those already positioned short in the market, there
were not a lot of clear cut patterns intraday other than the pivots off
support and resistance, which tend to be more difficult for many newer
trader. The greater amount of back and forth action would have also
made it easier to get whipped out of positions, only to have them turn
back around, particularly with the strong flush higher at 14:00 ET to
scare out weak shorters. Recognizing the greater odds for such a market
ahead of time or at least early on in the day can save a lot of time
and trouble and I was not in the least bit sorry to have had to have
missed much of the day.
There is still a lot of weakness in the market heading into the new
week. We now have two days in a row where the indices have held their
15 minute 20 sma resistance, however, and typically this does not last
for more than 2.5-3 days. At that point the market will at least put in
a larger correction intraday, breaking the 15 minute 20 sma resistance.
This means that new shorters will want to use greater caution,
particularly heading into the afternoon. We should start to see the
choppy action settle down a bit though, making it easier for those who
trade based upon 5 minute patterns intraday, which has been more
difficult with the type of trend we have had the past two days.
The longer term outlook is not looking that great for the bulls anymore
though. While I wanted to see a bit more of a correction to allow for
momentum to build on the upside, someone decided to stick a needle in
the market and instead of just deflating a bit, it had a rather
significant blow-out. The door is now wide open for a larger correction
into the 20 month simple moving averages.
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Economic
Reports and
Events:
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May 15: -
May 16: Building Permits, Core
PPI, Housing Starts, and PPI for April (8:30 am), Capacity Utilization
and Industrial Production for April (9:15 am)
May 17: Core CPI and CPI for
April (8:30 am), Crude Inventories 5/12 (10:30 am(
May 18: Initial Claims 5/13
(8:30 am), Leading Indicators for April (10:00 am), Philadelphia Fed
for May (12:00 pm)
May 19: -
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Earnings
Announcements of Interest: |
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Only stocks with an
average daily volume of 500K+ are
listed. List may not be complete so be sure to always check your
stock's earnings date before holding a position overnight. (A) =
Earnings after the close, (B) = Earnings before the open,
(?) = Earnings time not specified at the time of this writing
May 15: A (A), GG (A), PRGX (?), TGT (?), VAL (?)
May 16: ANF (A), AEOS (B), AMAT (?), CPWR (A), DE (B), HPQ (?), HD (B),
JTXX (A), NTES (A), PLAB (A), REDF (B), SKS (8:00 am), APLA (B), WMT (B)
May 17: ACXM (?), BEAS (?), FL (?). GYMB (?), HOTT (?), INTU (A), MW
(A), PETM (A), ROST (B), CRM (?), SNDA (A), SNPS (A), V (?), ZLC (B)
May 18: AAP (B), ARO (A), ALKS (?), ADSK (A), BKS (B), BRCD (B), CTRN
(A), CPWM (A), CLE (B), DELL (A), FMCN (A), GPS (?), LTD (?), MRVL (A),
NWY (B), JWN (?), SHLD (B), STP (B), PLCE (?)
May 19: ASEI (B), ANN (B)
May 22: CPB (?), FLO (?), LOW (?), TECD (?), PAY (?), WTSLA (A)
May 23: CSC (A), LNUX (A), MDT (A), PVH (A), TOL (?), ZL
(A)
May 24: AZO (B), CWTR (A), DLTR (B), JLG (A), MIK (?), NTAP (A), PSS
(B), SPI (?), TIVO (A), WSM (B)
May 25: BLI (?), CHS (A), CMOS (?), JOYG (B), PDCO (B), PDC (B), PLMD
(B), SAFM (B)
May 26: CBRL (B)
Note: All economic numbers
and earnings reports are in lines with those compiled by Yahoo Finance.
Occasionally changes will occur that are made after the posting of this
column.
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