{+++}This week may possibly tell us the real short direction of this market. We have many moving parts, and we will certainly have a lot to keep an eye on, the greenback, energy, and the bond market just to name a few.
The Dow Transportation Index is consolidating just under the 200 day moving average and on Thursday, the DJIA briefly traded intra-day through its own 200 day moving average. The S&P is teasing us at the 950 level and oil still looks bullish on the charts although it is getting a bit extended.
On the monthly chart of WTIC (west texas intermediate crude), it broke through the 38% retracement and the next level of resistance for black gold is around $79 which would bring it to its 50% Fibonnacci retracement. There is some resistance on USO at the $42.55-43.50 area so keep that in mind.
Materials of all kinds are hot, coal, steel, fertilizers, you name it, so this is an important sector to watch. My gut tells me the hedge funds and institutions could run this hard, right up to the end of June, which would be quarter end, month end, and will cap off the first half of the year.
If you are a hedge fund or mutual fund that has been bludgeoned like a baby seal for the last year and a half and you are not as long as you want to be, well, you better get long if they take this market higher. You either follow the momentum or risk losing your performance bonus or even your job. It’s such a “pack” mentality.
The financials, (XLF) are quietly ticking higher. It closed Friday for the first time above the 200 day moving average and if the index can tag and close above resistance at the $13.08 level the sector could really break out, however it it fails there, we will have some great shorting opportunities.
I reviewed our names on Friday but forgot to include OGXI, we have a qurter position but i may want toadd aggressively tomorrow, it has a beautiful bullish flagging pattern and if this evolves like I hope it will, we could see five to ten points, but we all know hope isn;t a strategy, LOL. But so far so good. Also monitor MFE which we still have a trigger buy on at 41.05, it starting to see some price improvement and is getting close.
The new names below are BTU, XME and UPL and one short, WYNN. Of course I wil do my best to give you intra day updates if I can. Let’s have a great and profitable week!!!!!!!!
