The main index I am following is still the Nasdaq and specifically the QQQQs. Technically, everything looks great and the QQQQs are holding support over the October gap.
RSI is going sideways at about 70 meaning there could still be room to run on existing positions but I wouldn’t want to add to my long QQQQ position right here. There is also some resistance at $37. I am going to look at some of the more heavily weighted components of the QQQQ to get a better feel for the index.
RSI on AAPL is at 75 and it is banging right up against a fib line and resistance. I’m not expecting AAPL to collapse here, but it is certainly overbought and a pullback is needed. I don’t see the QQQQs getting help from AAPL until some of this momentum burns off.
AMZN is bumping up against resistance and RSI is at 70. There might be enough juice left here to breakout over $88 but I don’t think we can really count on AMZN to push higher and push the QQQQs higher until it cools off just a bit.
CSCO could really help the QQQQs. It will be part of the Dow and it has a great chance to breakout over $20 and move higher. RSI is at 63 which is right where you would want it to be on a breakout. If CSCO breaks $20, it could help the QQQQs and I would also be looking to get long.
QCOM is hitting resistance at $46. RSI is at 65 and this one has a chance to breakout over $46 and run to $50. It has a chance to help move the QQQQs higher.
GOOG is looking very overbought. RSI is at 78. I would expect it to pullback to the $415-425 range.
The QQQQs seem like a mixed bag to me. It is not so overbought that it couldn’t run to $40 without slowing down. Still, many of its components are oversold. I’m not expecting a sell off because the breakout over $36 looks clean and strong. My hunch is we get some sideways action this week. Maybe it moves a little higher or even retests support (perhaps a range of $36-$37.5).
SEMICONDUCTORS
SMH could help the QQQQs move higher if it can hold support at $21. Not a bad long opportunity either because the lows from last week can be used as a stop out. If it opens in the red tomorrow, you simply don’t trade it.
RETAIL
It is hard to believe that XRT looks like a good long trade in this economy, but this is why I trade charts instead of fundamentals. Waiting for a breakout of $29. Easy stop out just below $28.
I will also be watching stocks retail such as ARO to see if it goes higher in the event XRT moves higher. ARO may be getting ready to make an all time high.
REGIONAL BANKS
If you need short exposure, IAT could be an opportunity if it breaks below $17.25.
TRANSPORTATION
I am currently short IYT, but it looks like a little bottoming pattern has formed. Somewhat like a cup and handle with a bottom, move up and a little consolidation forming right now. If this takes out my stop at $61.8, I will be looking to switch sides and get long IYT. For now, I’ll leave my short alone since it is so close to my stop. If we get a dip, I’ll likely cover this one.
TREASURY BONDS
TLT looks like it is headed for support at $87. The most likely scenario would seem to be a consolidation at that level. This would mean that the long TBT trade is over but it doesn’t mean it is time to get long treasuries. If we punch through $87 on TLT, the headlines about the United States losing its AAA credit rating and inflation will come back and the stock market will get hit. TLT should be watched very closely.
CURRENCY
The dollar was up sharply on Friday. I closed my long FXB and FXC positions earlier in the week. I’m still in FXA long but it is right near my stop out. After selling off hard, I wouldn’t be surprised to see some follow through from Friday’s action. If dollar strength continues, expect commodities to take a hit.
CHINA
China has been on fire. I think there could be a short term opportunity to get long FXP or short FXI and to then buy some of these names on a pullback.
FXI is right up against some pretty good resistance in the $39-40 range.
A stop of $11.75 could be used to manage risk on FXP (right below the recent lows). The trade could be managed by moving the stop up.
If we get a pullback on the China names, NTES, BIDU, SNDA and SOHU are all worth a look.
I happen to like BIDU at $275.
INDIVIDUAL STOCKS
NRGP on a breakout over $40.
ADM on a breakout over $29. Make sure the volume is there and this might also be one to play on a retest. I suspect many will be shorting ADM right at $29 for a scalp.
A breakout over $9.25 would be an all time high for CY.
I am in the process of updating my C&C Portfolio Holdings page and should have that updated shortly.