Stock Market Analysis and Stock Ideas by Marc Chaikin
The S&P 500 Index closed on Friday at 2,108.29, down 0.44% on the week after making a new all-time high on Monday. The market traded poorly all week as it reacted negatively to poor economic reports and disappointing earnings reports from key social media stocks like Twitter (TWTR), Yelp (YELP) and LinkedIn (LNKD).
Profit taking in the previously strong Health Care and Biotech stocks was also a drag on the market. On Friday, the market rallied sharply with the large cap S&P 500 stocks leading the charge while the market absorbed continued selling pressure in the high multiple social and cloud computing stocks.
The market made new highs early in the week led by the S&P 500 and the Nasdaq Composite, but finished the week lower with the real damage seen in the Russell 2000 small cap stocks and the high p/e multiple stocks in the social media, biotech and cloud computing groups.
Very strong earnings reports from Gilead Sciences (GILD) and our featured bullish Stock of the Week, AmerisourceBergen (ABC)which guided sharply higher, show that Health Care companies are still thriving, even as profit-taking dominated the trading action. The consensus is that a weak U.S. dollar has made the domestic revenue-centric Health Care sector ripe for profit taking. That is also the rational for the weakness in small cap stocks.
The bottom line is that we remain locked in the upper 1/2 of the trading range for the past 6 months. The low end of that range is 1,973 on the S&P 500 Index; the upper end is 2,125. Support exists at 2,040 - 2,070. A 5% decline from Monday's high would take us down to the 200-day average price of 2,027.
Given the market's propensity to sell-off in the early part of May, expect a further pull-back from resistance at 2,120 and keep your powder dry. Look for renewed weakness in the Health Care andConsumer Discretionary stocks with Bullish or Neutral+ Chaikin Power Gauge ratings as a buying opportunity over the next 3 weeks.
click here for more stock market ideas and analysis from Marc Chaikin.
Disclaimer: Chaikin Analytics LLC is not registered as a securities broker-dealer or advisor either with the U.S. Securities and Exchange Commission or with any state securities regulatory authority. Chaikin Analytics does not recommend the purchase ofany stock or advise on the suitability of any trade. The information presented is generic in nature and is not to be construed as an endorsement, recommendation, advice or any offer or solicitation to buy or sell securities of any kind, but solely as information requiring further research as to suitability, accuracy and appropriateness.
Users bear sole responsibility for their own stock research and decisions. Read the entire disclaimer.
© 2015 Chaikin Analytics, LLC. All rights reserved.