Sunday, October 21, 2012

Technical Picture - Tech Wreck Weighs on Broader Markets

The chart above shows S&P sector performance since the return from labor day weekend.We see that while technology fell 5%, financials spiked by 5%. Most sectors are positive so it is difficult to determine if the weakness in technology will spill through to other sectors and result in a sharper correction for the broader markets.

The next chart is a 20 year monthly chart of the ND.  Here we see that large cap tech stocks have retraced 50% of the tech bubble highs. This is the second rejection, the first being in April 2112, and the second in Sept. after briefly, breaching the 50% level.


The next chart is the daily ES, NQ, and YM futures.  As I wrote on Thursday, the NQ was going down to 2675.  By the end of the day we blew below that level.  Yet, the broader markets are still holding the neckline of the extension long levels.

I see a lot of support at NQ 2657, which has traded Sunday evening. ES needs to hold neckline support. I noticed that both ES and YM are coiling (red dots on the TTM squeeze indicator).  The red dots precede price expansion.

Tech earnings will be in focus again this week as AAPL reports on Thursday after the close.
AAPL reached my preliminary target EOD.  If price continues lower tomorrow morning, we will likely have extension shorts from the previous low $623.55 to new lows.  If price holds the -23.6 level, we'll use same anchor 682.62 to 609.61 to determine the next Fib. retracement.


Some of the widely held names reporting earnings this coming week include:

  • Monday: CAT, FCX, BTU, PCH, STI, CNI, HMA, MUSA, SWFT, TXN, VECO, WDC, and YHOO.
  • Tuesday: MMM, AKS, BEAV, CPLA, COH, DD, HOG, CPLA, PLD, RSH, RF, WHR, AFL, AMGN, BRCM, CHRW, GILD, GILD, JNPR, NFLX, PNRA, NSC, and VMW.
  • Wednesday: ALXN, T, BA, BMY, CP, LLY, EMC, GD, LVLT, NDAQ, NUVA, SAP, TROW, TUP, LCC, AKAM, AVB, CTXS, COHU, CROX, EXAR, FFIV, KNX, MERU, RYL, TSO, and ZNGA.
  • Thursday: FLWS, AET, MO, BIIB, BBW, CELG, CME, CCE, CL, COP, CS, D, DOW, DNKN, EVR, FLIR, IMAX, MCK, MJN, OXY, PCP, PDS, PG, RTN, SCHN, TZOO, UA, ZMH, AMZN, AAPLBJRI, CLWR, CSTR, DV, EMN, KLAC, NTGR, CODE, SPF, WOOF, VRSN, and WWWW.
  • Friday: ARLP, AON, ACI, B, CMCSA, EGO, GT, LEA, LM, ERIC, MRK, OHI, PPC, COL, and WY.

4 comments:

2fe1288e-133c-11e2-b18d-000bcdcb5194 said...

Thank you Jamie for a very detailed analysis of the market.

AAPL is at 625 - 38.2 fib retracement level. ES is holding support right now.

AAPL has two key events this week. I would think the market has priced in the earnings and the ipad event already ( efficient market !!). We could get a quite sell off after the earnings and move up for the next quarter which the post holiday season.

Appreciate your thoughts. Thanks

2fe1288e-133c-11e2-b18d-000bcdcb5194 said...

AAPL on a major DT with a bearish pennant ( MM is 575 ). Jamie you were right on the spot in your first chart of AAPL analysis itself. Wow, that was a great call.

All indexes are breaking down. Could they touch the 200DMA ?

My guess is we remain in this DT until post election week.

Jamie said...

Thx for the comments 2fe...

Yes, all major US indexes are broken. The NQ is holding the 200 DMA. Tomorrow we will find out of AAPL will join the tech trend of disappointing earnings. If AAPL surprises to the upside, it could neutralize short-term sentiment.

VIX and TRIN spiked yesterday, so we might get short-term relief. FOMC this afternoon will be important for short-term trend as well.

fccd1c20-1f1e-11e2-bd54-000bcdcb8a73 said...

Hi Jamie,

Quite an evening with the Tech stocks AMZN and AAPL reporting. Futures are down tonight. Interested in seeing what holds tomorrow. Sideways action in the market for another week perhaps.