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Stockhaven’s Market Take 1/10/13

The S&P500 managed to close at a fresh 5 year high today, finishing at 1,472. The new highs came with the VIX finishing at multi year lows. The gains were led by a familiar sector, with the financials moving to new highs as measured by XLF. Today definitely caught me off guard. While I’ve been expecting a test of 1,475, I started to get cautious on the financial trade the last few days. Obviously that proved to be a narrow minded approach as XLF made back all of its losses and then some from the last 3 days.

 Stockhavens Market Take 1/10/13

  • Waiting on QQQ to join the party — SPY, DIA, IWM, & MDY all managed to close at fresh 2013 highs Thursday, the same cannot be said for QQQ
  • Triple bottom in place for AAPL — Of the last four days, three of them have seen AAPL put in a low of day in the $515′s and a case for a triple bottom can now be made
  • Gold tries to bounce back — GLD managed to put in a higher low recently ($158.89 vs $158.39) and now finds itself back above $160

All of the major indexes and the Dow Jones Transportation index moved to new 2013 highs with the exception of the NASDAQ (as measured by QQQ). QQQ’s 2013 high resides at $67.34. QQQ is very close to this high but its inability to take it out is likely the reason we didn’t cross above 1,475 in the S&P500 on Thursday. Anyone who has been bearish is running out of reasons to keep being so, but QQQ’s inability to break to new highs with the rest of the market is one of them. Above $67.34 and $68 would be the next resistance level to watch ahead of $70. As far as support, the $66.17-$66.50 range has done a good job holding so far this year.

The main reason we haven’t seen QQQ rally to new highs yet is due to AAPL, which is still down on the year but managed to rally 1.2% on Thursday. AAPL had an interesting day, initially gapping 2% before giving up 100% of those gains and trading between $516-$518 much of the afternoon. However, around 2:45 AAPL went on a rip your face off rally, moving from $517 to $525 within 45 minutes. AAPL now has put in a low of day in the $515 price range 3 out of the last 4 days, signaling that $515 is a strong support level.

These 3 daily lows have formed a triple bottom in the stock but bulls will need to see a strong move back above $530 to confirm this pattern. Given that $515 support has been established, it is now the only support level I see above $500, so should it break I’m expecting $500 to be a magnet. AAPL is becoming a tricky overnight trade, I was sure it was going to gap down today and instead it gapped up huge, so as a result I’m avoiding taking overnight positions in it.

Gold had its best showing of the new year on Thursday with GLD finishing up nearly 1%. Yes the gains were small and the yellow metal is still trapped in a downtrend off of its September highs but there is something we must remember. Recall the summer of 2011, when the great debt ceiling debate rattled stocks, do you remember how GLD performed? That’s when GLD rocketed higher, hitting its all time high.

With another debt ceiling debate coming up next month, and likely to start creeping into the headlines, GLD might start to catch a bid. Be careful though because this has been a very sideways trade over the last few months, frustrating many who have looked for a move higher. In order for some momentum to materialize, GLD will need to break cleanly above the $164 level. As for support, traders will be watching the recent lows in the $159-$160 area.

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