Friday closed the day and week green across the broader markets. The strong close left the Nas Composite, Nas 100, S&P 500, Russell 2000 and Dow on new 52 week highs. Volume did not come in today despite the Nasdaq taking the leadership role to the upside into new highs. The NYSE had the lowest volume of the week on Friday and the Nasdaq was the lowest for the past four days, Monday was a little lighter than Friday’s for the Nasdaq. The TRIN closed at 1.45 bearish and the VIX at 18.13, about 8% off the 10dma. Gold closed up $5.50 at $1139.20 and oil up 9 cents to $82.75 a barrel.
This week left me wondering when no volume will start to impact this rise. The slow creep and the trend continues with no correction on this light volume. No volume means lack of participation and conviction for new money into the market. The low complacent VIX also is a sign of no fear in the market place. That is when you should get real concerned and stay on your toes. The Nas Composite and 100 have a 22 ADX, the SPX is 16 and Dow at 11, that is also a sign of complacency and a move is coming. With the range narrowing the moving averages (MA’s) have narrowed, they are still in bullish order but the 10ma and 20ema are converging with the 50dma coming up closer to the price action. All that really means is they act as a trendline of support under us, but any turn down lets the order turn bearish quickly.
On the weekly charts the COMPX and NDX have the stochastics at 95, RSI 70, and into the upper Bollinger band. The Nas Compx has CCI divergence on the weekly but the Nas 100 does not. The SPX is into the upper BB, 68 RSI, 91 stochastics and CCI only at 150. The Dow is sitting under the upper BB, CCI just under 100 line resistance, RSI at 68 and the stochastics at 91. Once the CCI is over 70 we start looking for overbought conditions, piercing that upper Bollinger is a spot to watch, and once the CCI reaches 200. So the Nas is at a keep an eye on fatigue and the SPX along with the Dow have a little room yet to move. This only tells us look for a pullback but don’t start top picking. The market can trade higher irrationally and overbought on light volume for longer than top pickers can hold onto short positions.
Into next week we kick off option expiration week and earnings season. The kick off with Alcoa isn’t necessarily a big market event on that stock, but it does start positioning and listening to what companies are doing. Intel and JP Morgan will be our focus with tech and financials looking to see what they do and what they have to say looking forward. Leaving us to still look for participation and an increase of volume as the week progresses. Expiration of options usually brings in additional volatility which we could use now to get us out of these narrow range days. Staying neutral was the weeks tone and until that changes we need a no bias approach.
Economic data for the week (underlined means more likely to be a mkt mover): Monday nothing due out. Tuesday 8:30 Trade Balance, 10:00 IBD/TIPP Economic Optimism. Wednesday 10:30 Crude Inventories, 2:00 Beige Book, 2:00 Federal Budget Balance. Thursday 8:30 Core Retail Sales, 8:30 Retail Sales, 8:30 Unemployment Claims, 8:30 Import Prices, 10:00 Business Inventories, 10:30 Natural Gas. Friday 8:30 Core CPI, 8:30 CPI, 8:30 Empire Manufacturing, 9:15 Capacity Utilization Rate, 9:15 Industrial Production, 9:55 Prelim UoM Consumer Sentiment, 9:55 Prelim UoM Inflation Expectations.
Some earnings for the week (keep in mind companies can change last minute: Monday pre market nothing and after the bell AA. Tuesday pre market KBH and after the market LLTC. Wednesday pre market NWPX and after the bell OHB, ZZ. Thursday pre market SCHW and after the bell INTC. Friday pre market JPM and nothing after the bell.
ES (S&P 500 e-mini) Monday’s pivot 1138.50, weekly pivot 1132.25. Intraday support: 1135.75-1134, 1129.50, 1125.75, 1122, 1116.50, 1113.50 fills gap, 1109.75. Resistance: 1142.75, 1147.50, 1153.50, 1160.50.