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Well we begin the last week of the month tomorrow and we’ll see if there is a rush to own stocks as the possibility of end of the month performance chasing kicks in.
Seasonally we are entering a time frame that can result in a bullish environment for the market. History doesn’t always repeat, so we will have to see. Technically the picture looks good as we saw a decent bounce that started last Monday. Although last week’ move higher was on light volume, it could lay the base for higher prices.
It’s possible that all the folks that needed to sell for tax reasons have already done so. If you take AAPL as an example, the stock sold off from 700 to 505, the stock is now building a new base which is very bullish. A “new” base is better than a “late stage” base which can have a tendency to peter out. Basically the “count” starts over in a new base.
As you know, I though the market action on Friday Nov. 16 was bullish and may have been the start of a rally. So far so good. Some of the reversals in the indices and stocks like AAPL were bullish that day, and in my opinion at the time, was a “tell” for the positive week we saw last week.
Some technical readings are now bullish. The MACD readings for S&P, Russell 2000, Dow Jones and Nasdaq have all turned positive on their daily charts. However, they turned up on light volume; I would rather see higher volume. It’s tough to make a market call based on weak volume readings like we saw last week, so this week will be important as far as validation and confirmation goes.
It would be helpful to see AAPL really lead again this week, GOOG is trying but needs to get over the 20 day moving average for it to get going. That price is around 670, however if it can get through 678, it could really get going to the upside maybe reach 710.
The financials (XLF) closed a penny above their 50 day moving average on Friday. I like the look of the daily chart, so a follow through higher will be helpful for the banks and the market.
Bottom line, it will be important for the market to build on last week’s gains or this could fizzle quickly.
With that in mind, I’m still bullish and have added some new long ideas to the P&L. Please go to the P&L to see entries and stop adjustments for all our names.
Have a great night and I will see in the morning.
NEW NAMES
HTZ 15.29
PKG 37
AMGN 88
RAX 67.19
RHT 50
AGCO 45.82