Back to the highs? Or retest the lows?
Last week’s rally has shifted the trend picture back to mixed for most major indices and sectors, with some – like the iShares MSCI EAFE Index and iShares MSCI Emerging Markets Index – actually showing a positive trend spectrum. While the odds probably favor a “retest” of the recent lows at some point, there’s still plenty of room for the current rally to continue within the context of a larger-scale correction or downtrend.
If the current rally is simply part of a larger correction or downtrend, it probably won’t last for more than another three or four weeks (if that), and probably won’t exceed key upper resistance levels at about 12,500-12,600 (DJIA), 2450-2470 (Nasdaq), 1430-1440 (S&P 500), and 835-840 (Russell 3000). The key near-term downside support levels I’m watching are the recent lows, of about 12,040, 2340, 1374, and 822, respectively.
New positions
No new positions this week.
Watchlists
New “upside strength” candidates this week include Belden CDT (BDC), Edison International (EIX), First American (FAF), Global Industries (GLBL), Hershey (HSY), Leucadia National (LUK), Ryerson (RYI), The Men’s Wearhouse (MW), Valero (VLO), and Western Refining (WNR).
New additions to the “oversold” list this week include Ameren (AEE), Biogen Idec (BIIB), General Electric (GE), Intuit (INTU), Limited Brands (LTD), Scotts Miracle-Gro (SMG), and Microsoft (MSFT).
