This market will not die. Just when you thought the index was going to make another attempt to crack 1300 it is right back at 1350. After making a low at 1319.75 mid-day on Thursday, the index clawed its way back to finish unchanged on the week.
Now with earnings season swinging into full force this week, it will be interesting to see how the street reacts this quarter. It is hard not to refer back to last quarter when a majority of the companies exceeded the street's expectations, but suffered a hair cut in their stock price. In view of the recent run-up in prices, expectations may be riding high again.
From a technical perspective, the market has found a trading range. Since June 29th, when the European Crisis was solved (again), the index has traded between 1313 and 1375. Investors that missed the opportunity the last time the index approached 1300 did not want to miss it this time, halting the decline before it even reached the lower end. The question now remains, will earnings be good enough to push the market through 1375 and to the recent high of 1413.75? If we are taking cues from last week's announcements, this is a good possibility.
Apple's (AAPL) rally came to a halt at an interesting level, 619.87, just between the post earnings high of 618 and pre-earnings high of 620.25. Keep in mind AAPL tempered expectations for the quarter, so it will be interesting if the earnings are in line with the lower guidance. A rally above 620.25 would certainly clear the way for an attempt at the all time high of 644. A breach of this week's low 592.68 could instigate a move down to major support at 565.
Exxon-Mobil (XOM) refused to go down with the broad market earlier in the week and now we know why, as it led the charge higher on Friday. Although it was unable to clear the July 3rd high of 86.28, that level will be on the radar this week. After that level, prepare for an attempt at the all important 52 week high of 87.94. To protect profits on the long side a break below the major support at 83 would be a cause for concern.
It took almost six months, but International Business Machines (IBM) finally filled the gap from January 19th and then some. In fact, IBM exceeded its June 4th low by over five points. After making a low at 181.85 on Thursday, IBM rebounded almost five points to close at 186.12. For longer term investors the low may be in for awhile and an entry around 185 with a stop at 180 may be the right move. Perhaps a good earnings report will push IBM towards major resistance at 200.
Microsoft (MSFT) gave investors an opportunity to purchase it within 22 cents of its June 4th low of 28.32 making a low on Thursday at 28.54. MSFT's visit under 29 was short-lived as bargain hunters scooped it up on the opening bell on Friday, but stopped shy of its double top from Monday (30.23) and Tuesday (30.22). To test that double top, it will have to chew through the minor resistance at 29.74 and stock for sale at 30 along the way.
General Electric's (GE) skid from 20.84 on June 29th ended just above its June 25th low of 19.29 at 19.36. Although this issue closed weak on Thursday, it rallied right off the open on Friday and appears to be inching its way back to 20, again. If GE can clear the double top form Monday (20.04) and Tuesday (20.07) it will face another double top at the July 3rd high (20.50) and July 5th high (20.48). After that yet another double top from the June 29th high (20.84) and July 2nd( high (20.82) will come into play. Any pullback to 19.50 will attract major buyers.
Similar to XOM, Chevron Corporation (CVX) barely flinched during the early week swoon in the broad market. And low and behold, the issue gives positive guidance after the bell on Wednesday. It had sort of a delayed affect as it did not really rally until Friday. The next major area of resistance for CVX will be the July 3rd high of 107.42 which coincides with the May 2nd high of 107.65. After that there is minor resistance at 108.79, but after that expect an attempt to crack 110. Expect minor support at 104 and major support at the weekly low of 103.29.
AT&T's (T) post dividend dip took it down to 34.65 on Thursday, just 12 cents below its June 25th low of 34.77. After recovering some on Thursday, the rally in T was on from the opening bell on Friday, allowing T to once again reside in the 35 handle by the close. Expect minor resistance at the weekly high of 35.73 and for institutional sellers to be once again perched at 36 and all the way up to the 52 week and multi-year high of 36.21. Expect buyers to congregate at 35 and all the way down to Friday's low of 34.85.
When Bill Ackman speaks, investors take action. Not always to the extent they did in Procter&Gamble (PG) this week, but it is hard to ignore when Ackman becomes aggressive in an issue. Perhaps he read my Weekly Outlook last week and noted my comments on its healthy dividend and possibility of capital appreciation as it retraced the recent down move from the 52 week high of 67.95 down to the recent low of 59.07. To be honest, I did not expect it to get almost all of it back in only two trading sessions. Technically I am clueless on this issue. If you are waiting for it to pullback and fill its gap from 62.70 to 61.90 you may have a long wait on your hands. On the upside, expect short-term swing traders to focus on the weekly high of 65.75 up to 66 as a possible exit point.
Johnson&Johnson (JNJ) finally busted through its major resistance on Friday at 68.10-68.15. An area that capped the rallies in five of the past seven trading sessions. Most likely, there will be some large sellers at 69 just ahead of the October 2008 high of 69.07. The only formidable resistance above that level is the all time high of 72.76 set back in September of 2008. Look for minor support at the old resistance level of 68.15 and major support at the weekly low of 67.44.
A bit of a upside surprise from Wells-Fargo (WFC) helped propel it to within an earshot of the major institutional sellers at 34 and within striking distance of its 52 week high of 34.59. With a close of 33.91, WFC will have a running start at the 34 level and should able to take out those institutional sellers. There is only minor resistance at the November 2008 high of 35.08 and it is fairly wide open after that. Expect scattered sellers at all the whole and half-numbers. On a pullback, look for 33 to provide minor support and expect the double bottom from the Thursday (32.64) and Friday (32.66) lows to be major support.
As long as the earnings due out this week continue to be good, the index should have no problem reaching the July 3rd high of 1375. After that there is minor resistance at the May 4th high of 1382.50. Beyond that level is the psychological resistance at 1400 and the March 14th high of 1413.25. If the earnings news begins to sour, the index will find minor support at 1335 and major support at the weekly low of 1319.75.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.