{+++} The Sunday evening videos will resume in full force next week.
If you look at a chart of the EURO, you will notice that it started to fail around April 2. You can say the same for the European country etf’s like EWP, EWI, EWG and EWQ. When these etf’s and the euro started to fail, so did our markets. Below you will see charts of Italy, Germany, France and Spain. They all fell apart and guess what? The U.S. markets went lower.
My point is that Europe is starting to upset our markets again and that disconnect (that the market enjoyed) and propelled our market higher, has run into some trouble, at least for now. You can look at the charts below to see what I mean. They all started to fail around April 3 or 4th. Spain has massive issues and their yields are starting to reflect some fear. This could be very temporary, but it bears watching.
As you can see below the S&P started failing when Europe did. First support is last week’s lows around 1357 (green line and green arrow) and secondary support is the red line and red arrow around 1340. We closed Friday at 1370.
US equities were down 1% to 2% across the board last week, and they’re down 2% to 3% so far this month. For the year, the major indices are up roughly 9%, yet the Nasdaq 100 (QQQ) remains up 18.56%. Looking at the ten US sectors, Energy (XLE) and Utilities (XLU) are now down year to date, while Consumer Discretionary (XLY), Financials (XLF) and Technology (XLK) are up double digits.
Looking outside of the US, Europe is obviously struggling the most, yet China (FXI) was actually up last week and is also up 2.06% in April.
Fixed income has rallied recently as stocks have struggled. The 20-year+ Treasury ETF (TLT), which everyone thought was doomed just a couple weeks ago, is up the most of any ETF shown over the last week and month to date. So much for the consensus.
AAPL & GOOG had horrible days on Friday and they are a very significant weighting in the Nasdaq 100, so a further fall there will add pressure, a rally would help things move up. AAPL has support at 600 then the 580-590 level. Earnings are on April 24.
Maybe this will be the week I can add in some of those “longer term” trades that I have been talking about. A cheaper level would be better on some of the stocks I’m watching. The market went out pretty ugly on Friday, but that is no guarantee that it will continue lower at the open tomorrow. Frankly I would like a healthy flush out early this week so we can set up some good long positions.
We have about 200 earnings reports coming this week and the tape is heavy, so I am not adding any names tonight. I would rather wait it out and let the dust settle.
I have a feeling we may get very active this week, so stay ready and keep your powder dry.