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arthur
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PostPosted: Sat Mar 12, 2005 7:44 pm    Post subject: Rotation Reply with quote

SPX (chart below) closed at 1,200 Fri, which is the Mar Max Pain point (OEX's Mar Max Pain point is 575, and it closed at 573 1/2 Fri). Normally, short-term trendlines are weak. However, SPX has short-term support at the uptrend line of the current rally and 50 day MA, which work together to provide stronger support (along with Max Pain). The 10 day MA is still above the 20 day MA, which is somewhat bullish short-term. Perhaps, SPX will trade between its 50 and 20 day MAs, i.e. 1,195 to 1,207, or around 1,185 (a strong support area) and 1,211 (10 day MA) or higher next week.

Next week is options expiration week, which is typically a volatile week. Moreover, next week is quarterly expiration or triple witching, which often tends to be more volatile. Furthermore, earnings warning season and end-of-the-quarter window dressing will influence the market.

Also, next week is a heavy economic data week: Tue Retail Sales and Business Inventories, Wed Industrial Production, Capacity Utilization, Building Permits, Housing Starts, and the Current Account, Thu Leading Indicators, Unemployment Claims, and Philadelphia Fed (a regional measure of economic activity), and Fri Export & Import Prices and Michigan Consumer Sentiment. Some notable earnings next week: Mon (after the close) XOMA, Tue LEH, Wed BSC SIL, and Thu GS MDW FDX PLMO ADBE NKE COMS and DG. So, next week will be busy.

Energy stocks pulled-back sharply last week, although oil prices remained high. If oil prices stay high next week, energy stocks may bounce. If oil prices fall, then non-energy stocks may rise. Also, bond prices fell sharply last week. So, there's more money to flow into stocks.

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