Following a 6 day winning streak for SPY and 4 straight days of record closing highs in the Dow Jones the logical expectation is for a pullback/consolidation to start the week. In addition we’ve got the probability factor, did you know last week was the first time all year SPY managed to close a Monday in the green? Monday has not been kind to the markets this year but it has been a good day to get positioned for a bounce. Why? SPY hasn’t seen a red Tuesday since January 8th.
At 1,550 in the S&P500 my March 16th target came 5 days ahead of time. With the massive open interest at the 1,550 call now in the money, I’d be surprised if we saw much extension below that level in the event of a pullback. Watch 1,545 to act as potential support since it served as the high of day on both Wednesday and Thursday. As for resistance, it’s a paltry .8% away at the all time high of 1,565. I believe the chances are good we see that all time high in the very near future. Below 1,540 and the market could be on the verge of a 2-3% pullback (which would be 1,500-1,520).
Turning to stock specific action I believe this week presents some rather intriguing possibilities. AMZN has recently broken back above the key $271 mid point level of 1/29-1/30 (for more on the $271 midpoint level and its significance, refer to my 2/24 market take) and now looks poised to make new all time highs. Should AMZN show the ability to stay above $273 and reclaim $276 early in the week then $285-$290 is in play by weeks end.
From potential all time highs to potential 52 week lows, insert your favorite flavored AAPL here. AAPL snapped a 3 week losing streak last week, albeit just barely, and my sense is traders are expecting a bounce to $440-$450 this week. While I don’t disagree with that expectation necessarily, I do believe it needs to break $435 Monday in order for that to play out. If AAPL remains below $435 early in the week then I am expecting it to make fresh 52 week lows this week. Above $435 though and $450 is a realistic target for the stock with resistance at $441 below that.
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