Markets are open, futures are quiet, barely unchanged. Interesting close to the week right? A bunch of weakness into the close on friday left the tape in an interesting situation. The week was still positive which was impressive but it looks like the market is ready soon for a big move one way or another, which way? Your guess is as good as mine, all we can do is look at the tea leaves and plan accordingly.
Without further ado, here is the S&P June Contract Daily chart
The white line at the bottom is the often followed 200ma, i’m not a huge believer in lots of indicators but if enough people follow something, it’s probably a good idea to be aware of it. The white rectangles are where there are gaps in the futures contract. Gaps are often filled but not guaranteed. If you think the tape maybe headed in that direction they can be excellent targets especially in conjunction with a volume profile.
So we have gap support around 1841 and that gap is filled around 1832. The next one is way down at 1767 to 1772 and the last one i am interested in for now is 1744 to 1750 which is just above the 200ma.
So what i am looking for is that if we get follow through on weakness, i am looking to see if these levels are bounced off or the tape drives through them. The gaps often act as magnets and the tape often back and fills into these so they are good to have on your radar.
On the upside, the resistance is 1876 to 1884, if we surge through that, we’re off to 1900+.
Here is a chart now of the same contract with the volume profile showing.
The arrows shown here are just lined up with the low volume nodes and high volume nodes on the volume profile. These are points of interest where buyers and sellers agree or disagree, i like to see how they line up against things like overbought / oversold extremes or gaps. Although volume profiling isn’t rocket science there is a certain skill and art in interpreting them which comes with a bit of experience. If you want to learn it thoroughly, please head over to futuresTrader71, he’s a fantastic teacher. All information can be found in the blog roll at the top.
So the final week of the quarter is coming up, i’ve no idea if they are going to take it up into the end of march or sell off hard with profit taking but an opportunity should come up either way.
A daily chart of AIG.
I love this stock over the long term for several reasons. The dividend growth potential, the extremely low payout ratio, the book value, the business of insurance and so on. Who would of said that a few years ago right? Anyway, it looks like they took it down a peg on friday and it looks like more weakness is probably due in the short-term.
The dashed yellow lines are showing the support and resistance, the chartists will likely call this a pennant which implies some kind of breakout towards the end of the pattern, i don’t focus on that too much, the stock just looks like it is churning at the moment…waiting for a catalyst whatever that is.
I will focus on other stocks soon, this blog is starting to look like an AAPL stock blog 🙂 , below is a daily chart of AAPL into the close of friday.
Descending trend line still keeping a lid on this bad boy. Amazing to think that the stock has been stuck in range of $515 to $550 or so since the beginning of Jan, it’s building energy again for a big move up or down. All you simply need to do is watch those 2 levels, a break out of either should lead to a significant move of about 10% or $50 or so in my eyes.
Below is a daily chart of IBM. Interesting churn around this 170-188 level right? I’ll keep buying it in the low 170s but if they can sort out this revenue stuff and surprise analysts, this stock could have a nice move to $200. If they keep missing, it could spell trouble but they are starting to move aggressively into the cloud now with their softlayer acquisition. Earnings due 16th April, watch how the stock positions itself with a couple of weeks to go. Just looking to play calls or puts on this as they provide a nice pop when the stock does move.
A 10 year monthly chart of Veolia
Another large holding of mine in the portfolio. This is a long term play for me. I love the basing pattern of this stock over the last few years when it got to a crazy low around 9-10$. With droughts and floods becoming more frequent due to climate change ( see California or the UK) i’d like to think a stock like this may be able to help somewhere, somehow whether with sewage, transfer, desalination or whatever. It’s a huge company with a few hundred thousand employees. There are many other stocks around ( AWK and the like ) and i’d will probably some others at some point. i like to take on the ones that got hammered the most and these guys got it on the chin during the financial crisis with the ridiculous amount of debt they owed. They’ve great progress according to the last earnings report and i like the way the CEO is moving the company – it would appear Wall St is also starting to like. So playing from a fundamental and technical perspective, i think this stock could get back to $30 to $40 over the coming few years, it also pays a nice dividend in the meantime, only annual and yes French withholding tax blows, but better than nothing.
Finally, a chart of Lloyds banking group.
Banks you either love them or hate them but i like the fact this one has moved significantly in the last year and it has a bunch of catalysts coming up. i like the fact that the government is likely to exit its remaining stake this year or next, i like the fact the stock is acting weak recently which means an opportunity for me. I like the fact the CEO is on record to start dividend payment sometime later this year, or maybe next year. The daily chart shows a bit of frustration by the longs and price is beginning to rollover, anything in the $3-$4, i’ll be accumulating for the long haul, i think in a couple of years this will probably be a $7-$10 stock paying a nice dividend. It won’t be a sexy momentum play like Tesla ( TSLA ) but that isn’t the strategy for this one.
Image courtesy of David Castillo Dominici / FreeDigitalPhotos.net