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StreetOne Technical Analysis, LLC Market Summary-04/16/2010

|Includes:EEM, EWY, GLD, IAU, IWM, KBE, QQQ, SGOL, SMH, SWKS, TNA, USD, Financial Select Sector SPDR ETF (XLF), XSD

 After opening flat to slightly down, the Market was choppy in a fairly narrow range, but managed a small gain and new highs. At the close, the DJIA was up 21 points, the S&P500 up 1, and the Nasdaq100 up 9.8. All three indices inched to new closing highs again, and were joined by the DOW Transports and the Russells’. Breadth was even on the NYSE and volume was good for the third straight session.  Technicals remain positive. We have had a straight run to the upside since early February so some short term caution is warranted. Important near term support remains at 1175 and 1975 areas for the S&P500 and Nasdaq100, however, watch to see if we can hold the 1200 and 2000 levels. The S&P500 and the DJIA meet upside resistance near 1225 and 11254 areas(Fibonacci levels).  The Nasdaq100 bumps into critical resistance in the 2035-2055 area. The Financials (XLF), off slightly to 16.98.  Support now at 16.90, 16.75, 16.50, and 16.30.  Resistance is now at 17.00, 17.15, 17.25 and 17.50. GOLD(GLD) moved up 0.5% to 113.65. Remains a buy above 112, but has been hitting resistance just above 114.00. The VIX moved to the upside 1.9% 15.89.  

 

Trading Trend

Long term, technicals remain positive as we continue to make new highs. Short term, upside bias continues. We remain short term overbought. Near term, we held psychological support levels but this move is getting long in the tooth without any pullback. Caution near term. Earning’s season continues and options expire today.  Today’s futures(at 8:15am) are slightly lower versus fair value. Economic recovery confirmation(e.g.-employment, consumer spending) and interest rates have become the key Market movers.

 

Major Economic Reports Today:

Building Permits/Housing Starts -8:30am    Mich.Sentiment-9:55am 

  

MAJOR INDICES - Short term support and resistance levels

DJIA-(close 11144)

SP500-(close 1211)

N100-(close 2038)

11125

11155

1211

1213

2035

2040

11117

11254

1200

1225

2027

2050

11009

11325

1195

1237

2025

2055

11000

11415

1188

1250

2012

2075

10906

11500

1181

1265

2000

 

10800

 

1175

 

1998

 

10725

 

1165

 

1988

 

10702

 

1160

 

1975

 

10699

 

1154

 

1973

 

 

Options/Derivative Flows(from the desk of P.Weisbruch)

In SMH (Semiconductor HOLDR) which we have noted the breakout strength from a technical standpoint in recent recaps, upside volatility buyers have been around.  August 31 calls versus stock, delta neutral, have been purchased in good size, which shows that investors still may be positioning for further upside in the sector which has rallied over 7% this week. In XLF (SPDR Financials), longer term downside hedgers have been around in the January 2012 puts, and also sellers of September 19 calls. The call sellers likely have a long position in XLF and are collecting premium from the sale of the out of the money calls, and perhaps calling a "top" in the sector. Finally in IWM (iShares Russell 2000), which has also been featured repeatedly in recent recaps, noting the technical strength buyers of downside puts, the September 60 strikes, have been present. These put buyers are probably hedging a long position in the ETF, and taking advantage of the recent run up to buy downside protection in the event of a correction.

IWM (iShares Russell 2000) puts continue to be active, mostly out of the money buyers taking advantage of low volatility levels in the VIX to buy protection. Similar trading occurred in QQQQ (PowerShares Nasdaq 100). Also, in EWY (iShares South Korea), buyers of May 47/50 put spreads hit the tape in good size.

 

In KBE (SPDR KBW Bank), bearish flow in the options continues as the ETF climbs to new 52 week high levels. A customer sold calls and bought puts in the May 29 call / 27 put risk reversals, and is likely positioning for a reversal in the sector.

 

Trade Ideas

SWKS-Closed 16.42. Broke out above 16.41 to 16.55 mid session then pulled back to close just above. Remains buy above 16.41.

GLD-(SPDR Gold Trust)-Closed 113.65. It remains buy above 112. Similar trade IAU(iShares Gold Trust). SGOL(OTC:ETFS)- Closed at 115.83. Remains buy above breakout of 115. May test all time high of 121.50.

EEM(iShares Emerging Markets)-Closed at 43.74. Remains a buy above breakout level-43.20.

 

Recent Calls

SMH(Semis Holdrs Merrill Lynch)-Closed 30.45(new high). Up 5.9%(1475% annualized) since 4/12. Breakout level 28.60.  Similar trade USD(2X leverage), XSD.

IWM(iShares Russell 2000)- Closed 72.43(new high). Up 3.9% since 4/05. Similar trade TNA(Direxion Small Cap-3X leverage)

S1F In the News: http://www.streetonefinancial.com/news.html


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Disclosure: No positions
Stocks: XLF, GLD, SMH, IWM, EWY, QQQ, KBE, SWKS, IAU, SGOL, EEM, USD, XSD, TNA