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HUM, INTC, AWI, Hit Their Mark

May 13, 2011 8:39 AM ET
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Earnings season could ignite another move in equity indices next week, and start to get S&P 500 valuations up to test 1360 areas, if sentiment towards stock values remains positive. Recent buy signals that formed on Humana (HUM) (78.50) from 77.20, on Intel (INTC) (23.70) from 23.20, and Armstrong World (AWI) (47.50) from 47.50, which were highlighted in recent Daily Client Notes have hit their initial targets.

TheLFB trade desk have been calling for consolidation at support above 1325 on S&P 500, the area that the index reversed higher from in yesterday’s session. European equity indices held above 7300 on the German Dax, and Asian markets are back to 9680 on the Japanese Nikkei. The intra-day volatility in equity trade has followed the same pattern seen in currency and commodity trade, with few potential signals forming in the near-term.

SPY, the exchange traded fund that tracks S&P 500 movement will generate  a near-term buy signal with a break above 135.45, with initial targets at 135.75 and 136.10. Detail will be sent to clients if that momentum is confirmed in Friday trade. Seven sessions of choppy sideways movement on SPY (135.10) trade, followed by a move lower that found support at 133.45, have created messy technical charts.

The main US ETF’s that track technology (XLK), energy (XLE), semi-conductors (SMH), financials (XLF), and emerging markets (EEM) are moving sideways, with little indication that long or short signals will easily form. The Russell 2000 (RUT) will signal a long trade with a break of 846.00 that targets 849.00 and 853.00 in the near-term. Detail will be sent to clients when confirmation of the potential is seen.

Sentiment towards the S&P 500 remains mixed, as volatile buy and sell moves recently are absorbed. Price action favors a consolidation in trade after a bout of selling was reversed in the last session. Caution is required with any positions held in equity indices trade on Friday as TheLFB trade desk is looking for weekly chart closing detail to evaluate long-term potential.
Price Action:
There was strong S&P 500 buying activity previously at 1330 in early May, as highlighted in Daily Client Notes, which once again has been a main area of support. There is a potential price reversal area of note at 1360 resistance. These swing point areas, where a new near-term trend forms and price action reverses previous trade direction will be closely monitored, and market alerts sent to subscribers as things develop.

The daily trading range on SPY is 13 points, which is above the historical norm and indicates that volatility is increasing, in low-volume markets. The 20-day Simple Moving Average (SMA) on SPY is @ 134.00. SPY price action has a 36-month 75% correlation to crude oil moves, and a 90% correlation to the aussie (Aud/Usd) currency pair.

The detail below will help guide traders with analysis on intra-day price movement, trend, and momentum. Clients will note how regularly the Swing Point and Support or Resistance areas below are traded at each day.


Content taken from TheLFB Trade Plans

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