Watchlist Saturday

Dow: IT (intermediate term) Bearish and ST (short term) Bullish to Neutral. The Dow went right into the key support zone between 10,700 - 11,000 (green circle on the chart). The index threw a Hammer/Engulfing hybrid candlestick and looks like it could continue to move up for several more weeks. However, the Dow may run into short term resistance in the 11,500 - 11,750 zone (pink circle on the chart), to we may see some wiggling around next week, perhaps a short-term pullback as traders test whether or not the Dow has set an intermediate term bottom. I am very intrigued by the Hammer on the Weekly chart, though, and I am starting to speculate the index could bounce some more, or even trend towards the top end of the channel.

Here is the long term chart of the Dow: (click on image to enlarge)

SPX: IT Bearish and ST Bullish to Neutral. The SPX bounced nicely right off of 1,200. The index also threw a Hammer on the Weekly charts. The short term move may be exhausting itself, but will probably be extremely dependent on how the earnings reports come in for BAC before the open on Monday and AAPL after the close on Monday. The early part of the week is light on economic reports and pretty benign overall. The majority of the focus will probably be on earnings and oil prices. Resistance is right in the 1,260 - 1,275 area and support is 1,200 - 1,210. The Hammer on the Weekly charts is portending a possible move up for another week. The Hammer along with a huge amount of earnings reports is why I will be cautious and nimble on any put plays on the SPY this week. If I play puts, I will likely keep it intra-day.

Here is the shorter term chart of the SPX:

(click on image to enlarge)

Here is the longer term chart of the SPX showing the Hammer and the possibility of an intermediate term trend towards the top end of the long-term channel:

(click on image to enlarge)

Naz: IT Bearish and ST Neutral to Bullish. The Naz tested a key support zone between 2,150 - 2,200. The index bounced quickly right into a short term resistance zone of 2,280 - 2,320. If the Naz bounces up again from here, it will likely be because of the Tech earnings reports this week come in better than expected. Like the Dow and the SPX, the Naz looks intriguing on the Weekly charts because of its Hammer-like candlestick. If the Naz can close above 2,325 then it could make a run towards 2,400. Also like the Dow and the SPX, it is starting to look like the Naz is trying to hammer out an intermediate term bottom.

Here is the shorter term chart of the Naz:
(click on image to enlarge)


Here is the close up of the Weekly chart of the Naz showing the Hammer-like candlestick:
(click on image to enlarge)

Like last week, I am reluctant to lock in on a Watchlist with so many companies due to report earnings, but I am playing momentum day to day. Right now, Financials, Discretionary Spending, Cyclicals, and some Retail are strong. Tech is a little squishy still, and Energy and Commodity based stocks are weak. Watch Energy because those stocks may be ready to bounce a little, even though they are in intermediate term consolidation mode.

Tomorrow I will demonstrate with a paper trade an Earnings Strangle on AAPL. I will buy an August put one strike out of the money and an August call one strike out of the money just before the close.

One final note: My employer is disallowing any personal blogging during work hours. This means that for the near future I will be doing recaps of market action and trades that I entered or exited outside of my work schedule. I will do my best to set up potential (paper) trades ahead of time for now. I am requesting that no-one email my employer for now on this particular subject (although I do appreciate what you have done for me in the past) while I set the table for a different way of doing things. I will still get the postings open every day so you can comment to one another, and I will answer questions and post content and charts as always. I know that this will be a disappointment to many of you, but hang in there, things have a way of working out in the end.