Traders Corner   14 comments

The technicals today aren’t as important as the sentiment, mostly because the technicals are mostly neutral. However, the S&P 500’s momentum technicals (PPO and MACD) showed a little more bearishness after yesterday’s drop. The S&P 500 did manage to finish above the 20 day moving average yesterday, so it may challenge that support level today. Beyond that, the next firm support level is all the way down at 1830, a 1.6% drop from yesterday’s close.

Regarding sentiment, the futures are on the negative side of flat this morning. But the big question is whether the markets will continue with the negative reaction to yesterday’s Fed announcement? The only bullish argument I have heard is the economy is improving (although I have yet to see it except for in a few isolated economic reports). The bearish argument seems to carry greater weight here: flat economy and the Fed is tapering QE while considering their next rate hike, on top of overpriced stocks. Once the bulls wake up and realize they are taking a “glass half full” view of a slowly draining glass, the markets could turn very ugly.

The S&P 500 levels to watch today:

UPSIDE: 1862-1863 (2 data points), 1867-1877 (11 data points and February’s high), 1881-1883 (3 data points and the all-time high), and 1886 (top of the Bollinger Bands).
LAST CLOSE: 1860.
DOWNSIDE: 1857-1858 (2 data points and the 20 day moving average), 1849-1854 (4 data points and January’s high and December’s high), 1839-1842 (3 data points), 1834 (March 3rd’s low), 1830 (50 day moving average and the bottom of the Bollinger Bands), 1812 (100 day moving average), 1775 (October’s high), 1770 (January’s low), 1769 (150 day moving average), 1767 (December’s low), 1745 (November’s low), and 1740 (200 day moving average).

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14 responses to “Traders Corner

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  1. Marshall, MET is up today again, would you buy into the strength or wait for a pullback?

    • Ron – MET is a long term holding for me, so a thirty of forty cent price movement really does not change my view. If you are planning to hold for a couple of years, then current price seems fine to me. It will really move in tandem with the ten year note for the near term. S as interest rates rise, MET will rise. That means the answer to your question is do you believe interest rates will now just steadily rise (which means MET is as cheap as it will get) or do you think rates over reacted to Yellen yesterday and they will pull back again (which means you will likely get a better entry point).

    • ron,
      From a value perspective, it’s close to being fairly priced right now. Waiting for a pullback would be a good idea.

      From a technical perspective, it’s had a nice run-up since the start of February, so it’s beginning to look ready for a pullback soon. It’s starting to look overbought, plus it’s in a narrowing wedge pattern, which means it should get a big move soon.

  2. We it be better to buy an ETF like IAK?

  3. Yesterday some people on here were saying that’s it, they were done with mining stocks….it that the time to jump in when people finally get sick of holding them?

    • To be accurate, I was sick of holding them several months ago.

    • Bobb,
      I think I’d want a larger sample than can be found on my blog, but you have the right idea.

      Rule of thumb: When CNBC runs an article saying to get out of the mining sector, it’s probably time to get in. 😉

  4. Just sold LNG Mar 28 55 covered calls for .75. Current price for LNG is 53.50 so if I get called out I will make 11%+ for just over a week. However, I want to own LNG long term and do not currently expect to get called by next week. If I do then I will rebuy the shares

  5. Another isolated financial/economic report has the market moving up. Own BAC & C and both have moved up nicely today.

    • Bobb,
      Before you get all bullish on this news, consider the BDI is still about 35% down from where it was in December, and that is with the increase since February.

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