Retest of the highs ahead?
The weekly trend picture is once again almost all positive, reflecting last week’s continued strength in the markets and most indices. Even the weakest sector – Financials – has improved from being all negative last week to now mixed/neutral.
While some “backing and filling” might be expected here as the market approaches its recent highs, a retest of those highs seems increasingly likely, especially given that some global markets (those in asia in particular) have already surpassed their pre-selloff highs. Another intermediate-term positive for the U.S markets is that put-call ratios have now given buy signals, according to the Option Strategist.
Near-term upside resistance levels for some of the U.S. indices are at about 1450 and 1460 (S&P 500); 2470 and 2500 (Nasdaq); 845 and 850-855 (Russell 3000); and 12,600, 12,700, and 12,800 (DJIA). Key near-term downside support levels appear to be about 1440, 1430, and 1410 (S&P 500); 2450, 2430, and 2405-2410 (Nasdaq); 835 and 825 (Russell 3000); and 12,500 and 12,350 (DJIA).
New positions
No new positions this week, although I did buy back the April 55 puts I sold last week on UnitedHealth Group (UNH). The stock sold off more than I would have liked after I initiated my position, so I took this week’s nice rally in UNH as an opportunity to close out my position for about breakeven.
Watchlists
Stocks showing up on my “upside strength” scans this week that caught my eye include Alpha Natural Resources (ANR), Arch Coal (ACI), Chesapeake Energy (CHK), Coca Cola (KO), Commercial Metals (CMC), Hillenbrand Industries (HB), Eli Lilly (LLY), IMS Health (RX), KLA-Tencor (KLAC), Mattson Technology (MTSN), Nash Finch (NAFC), Peabody Energy (BTU), Steris (STE), Technitrol (TNL), Worthington Industries (WOR), and Wyeth (WYE).
“Oversold” candidates of interest this week include Astoria Financial (AF) and Brown Shoe (BWS).
