Thursday, June 18, 2009

Quarter End Fast Approaching

We are heading into the end of the Month and the end of the Quarter. Last month saw a huge move up in its last few days and a 1% gain in the last few minutes of trading.

The NYSE ($NYA) has broken below its 20-day (Green Line) for the first time in mid-March. The NYSE is a very broad index covering over 2,000 US and Foreign stocks.
The broad market has gone nowhere for 7 weeks.

NYSE 6-month Chart
This is a very busy chart, but I want to take a detailed look at the broad market -

The NYSE tracked the 20-day (Green Line) during this rally, where every time it touched the 20-day, it rallied higher (Green Arrows). NYSE broke the 20-day on Tuesday
The last 3 days of May were a Futures-driven moon shot to make May Statements look better (Black Arrow and Box)
NYSE spent most of June in a narrow trading range. It tried to break out and failed and has now broken down. Support now lies at the 50-day (Blue Line) and the 200-day (Black Line)
Everybody seems to be expecting a pullback. The logical levels are 5,431 and 5,191 as support

NASDAQ 100 (QQQQ) has pulled into its 20-day. QQQQ has been the leader on this rally, so it will need to be watched very closely. A 50% retracement of the recent rally would take QQQQ back to the old breakout point (Red Line).

Lots of leadership has pulled back into logical support, so pay close attention to these names –

Apple (AAPL)
Apple has been sitting on its 20-day for 4 trading days and should make a violent move very soon (beware, Apple is a volatile stock). Keep in mind that RIMM comes out with numbers today, so anything can happen.
My guess is that the Institutions that hold Apple will try and defend their gains into the end of the Quarter. A logical assumption is that they take Apple up to challenge the highs of early May and then blast it. I will be looking for divergences on any rally. If Apple fails here, then next support is $130.

Commodities have been leading and may finally be pulling back into support for a better entry point -

Gold (GLD) has pulled back nicely over the past 2 weeks, and now sits on its 50-day (Black Arrow and Line). A break above 97.5 would be a breakout from a 16-month base.

Freeport MacMoran (FCX) has been the leader for commodity stocks and has now pulled back to its 50-day (Black Line). FCX is down 17% in 6 days, but is still in an uptrend.

I am very interested in Biotech, with BBH trying to break out of a 4-year base.

I still consider this to be a trading environment for stocks, until the markets have some sort of retest of the March lows. I consider any pullbacks to be places at which I can add to holdings in Gold and Commodities.