What a week for Federal Reserve Chairman, Jamie Dimon, I mean Ben Bernanke. With the premature release of the most recent Stress Test results, another leg of this overextended bull market was unleashed. As investors and funds managers identified another sector besides technology, (or should I say AAPL), to park idle funds. As a result, Bank of America (NYSE: BAC) is nearly a double-digit stock once again.
After clearing the former high of the move (1371.50) on Tuesday, the S&P 500 Index never looked back, reaching 1400.50 (yes, another new handle) during Friday’s docile triple witch expiration and peeling back ever so slightly to close at 1398.50. So what is next, dare I say 1425.00, a level that was last visited in January of 2008? And as long as the index stays above 1384.25, there is no reason to put in any protective sell-stops. Warning, whenever I get this bullish, a top is on the horizon.
Well I could not have been more wrong about Exxon-Mobil (NYSE:XOM). After predicting last week a breach of the 84.00 level. XOM turned on a dime Monday, put a double bottom in place and headed north. However, instead of making a new 52 week high (88.13), or even a high for the move for that matter, it stalled just shy of 87.00. In fact, it approached that level in three of the five trading sessions and was rebuffed by High Frequency Traders leaning on the institutional size at 87.00. Perhaps the bull market can drag XOM along, through 87.00 to test the recent high (87.93) and the 52 week high. As long as 84.00 holds, this is the most likely scenario for XOM over the next few weeks.
Nearly another 50 point week for AAPL (NASDAQ:AAPL), so what else is new? After busting out of last Friday’s miniscule four point range on two gap and go’s (Tuesday and Wednesday), 600.00 was on the radar. And it did get there (barely), topping out at 600.01 on Thursday before settling at 585.57. Unfortunately, I have no idea where the top in AAPL will be, although many Wall Street analysts foolishly attempt to predict it. However, I can warn investors about one level to be cognizant of on the downside. 578.00, Friday’s low, which was just under Thursday’s low (578.55) is a place to exit if you cannot stomach a move back down to 550.00.
Now that International Business Machines (NYSE:IBM) has left 200.00 in its tracks, when will it reach 300.00? Well it is no AAPL so that may take awhile. Interestingly, some traders or funds placed a large wager on Friday in this issue. After spiking nearly a point and a half (207.52) over the previous all time high (206.18) during the session, IBM closed .01 off the low of the day at 206.01 on monster volume. Whenever a stock or commodity closes near the high or low of the day, it provides a good trading set-up for a continuation of the existing move or a reversal the following session. Furthermore, IBM’s volume, double the three month average daily volume (4.6 million shares), at 9.6 million shares adds further importance of this level. Of course some of the volume may be attributable to options expiration. I encourage owners of IBM to focus on 206.00 if they are tempted to lock in some profits during next week’s trading.
Chevron Corporation (NYSE:CVX) was finally able to make a new 52 week high (112.38), but was unable to close above the long standing 52 week high of 110.99. The reason for this being, is that once the HFT’s take out a major level, there is never enough volume in this decimal laden world for them to exit their longs at a profit. Thus, they all end up puking out their longs at the same time and CVX spikes down and then floats back up. Looking at the charts since last April every time CVX has made a new 52 week high it has violently sold off. Of course, during those time periods there was an overall heightened volatility in the market. Nevertheless, two fundamental factors seem to be affecting the price of crude oil which has an influence on the price of oil stocks. The first one being, will Israel attempt to take out Iran’s nuclear facilities. Secondly, if and when is Obama going to release any of the United States strategic oil reserves. Since I do not have an answer to either of those questions, long term investors should place their sell stops at 108.00 and let the market take you out of your position.
Microsoft (NASDAQ:MSFT) is doing what it always does. Double or triple top or bottom, slight retreat from it, then consolidation and an upside breakout or breakdown. However, this week MSFT has indicated that the next move may be south. After making a triple top (32.88, 32.94 and 32.95), it has made a triple bottom (32.49, 32.58 and 32.50) during the last three trading sessions as well. More importantly, MSFT settled on Friday (32.60) near the lower end of this range. Therefore, a lower open on Monday could signal an end to MSFT’s current run from just under 25.00.
General Electric (NYSE:GE) made an impressive move last week. Following through on the company's confirmation of earnings projections last week with a vengeance. After trading between 18.50-19.50 for the majority of 2012, GE was able to close above 20.00 for the first time since last April. If this momentum can continue in GE, look for a test of the 52 week high at 20.85 and the February 2011 high of 21.65. Only word of caution for this issue is that the current run of eight consecutive higher highs and higher lows is unsustainable. Perhaps a pullback and consolidation around 20.00 will occur this week. A string of closes under 20.00 may indicate a bigger pullback will be forthcoming.
Quiet week for Procter and Gamble (NYSE:PG). After Monday’s .78 gain, PG has run into some major institutional size at 68.00. And the HFT’s guys are loving it. Stepping out and shorting PG in the high 67’s was a consistent money maker for the remainder of the week. With PG succumbing to the selling pressure on Friday and testing the quadruple top area that it broke out from on Monday, expect a 67.00-68.00trading range until the size at 68.00 is satisfied or the buyers at 67.00 disappear.
Johnson&Johnson (NYSE:JNJ) has offered up a similar scenario to PG. Institutional size at 65.50 has capped every attempted rally in JNJ for the entire month. There is simply no driver for this issue until the next earnings announcement on April 12th. Since going ex-dividend last month JNJ has been able to recoup that dividend ground, but that is it. Also, this issue has been ignored by Wall Street analysts for some time. With the only significant news being the announcement of a new CEO and Warren Buffet’s exit from this issue, expect more of the same this week, with 65.50 acting as major resistance and 64.80 as major support.
AT&T (NYSE:T) is looking toppy. Three consecutive highs between 31.65-31.80 have kept a lid on the rally from 30.00. Of course, the 52 week high of 31.94 and the institutional size at 32.00 has provided the HFT traders with another issue to feast on. Therefore, the tug of war will continue until the size at 32.00 is taken out, or the major support at 31.35 is breached. Perhaps the announcement of the I-Phone 5deployment will be enough to keep the positive momentum going.
Once again, Pfizer (NYSE:PFE) is flirting with 22.00. After closing at 22.01 on Tuesday, PFE was not able to post another close above 22.00 for the rest of the week. With 22.10 acting as a double top and 22.17 being a four year high, this area is going to be difficult to penetrate. Without the positive announcement of a new drug trial or a hike in the dividend, there is no driver for this issue. Nevertheless, a string of closes above 22.00 may be enough pressure to induce a rally in this heavily shorted issue. The longer the consolidation at 22.00 persists with no break-out to the upside, the more likely PFE with drift down to the major support at 21.00.
In closing, there appears to be no end to this bull market. With positive news on the financials, there is an entire new sector for traders and fund managers to focus on. Keep in mind, many of these issues (GS, MS, JPM, BAC, and WFC) have a ways to go, in order to reach their 2008 levels. Unless an I-Pad blows up in someone’s face and kills them, there is no reason to be short this market. But just to be on the safe side, focus on a close below 1384.00 (June futures) to indicate a change in this rosy scenario.
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