5-01-2012 3:29 pm Update: The SP500 Index (SPX, SPY) is indeed getting very close to doing a complete retest of the prior high on April 2nd, so this weekend’s analysis is coming to pass. In fact, the Dow is now at a new high above the April high, so for the Dow it is breakout time. The SP500 Index has some room but not much left (0.93%) to get to 1422.38. Read my Twitter comments about the metals trades that still look great (the tweet link is to the right on this page and you can follow me on Twitter as well.)
Published on 4-29-2012 (out each weekend)
The VIX is coming down and has plenty of room to fall to get to the March low. That means the SP500 Index can rally back to the prior high or perhaps just below. The Dow has already tested the closing high on 4-2-2012, so if we see a new Dow high that would be bullish. The Dow Transports are lagging and should confirm a Dow breakout if it occurs. If not, that would be a sign of weakness. The banks (BKX) are supportive of the rally and recently bounced off of support of the 50 day moving average.
The market shrugged off the Spain debt downgrade last week. That is very positive and is supportive of a further rally. One complaint about the rally is that the volume is low. But for the NDX (QQQ), the volume has not been that bad actually. Both the NASDAQ and NDX recovered from their swoon that threatened a big break below the 50 day moving average. There was no follow-through to the downside.
The lack of volume in some of the indices, may mean that we won’t see new recent highs soon, but it does not prevent a retest of the recent high and as I said, the Dow is already back testing the last high. Oil is creeping up and commodities seem to have reversed from a bottom and both gold and silver look like favorable trades from here. Silver is quite volatile and not for the gun shy investor. I established a silver position on Friday in two steps, the second near the close. I often split my trades into two parts on a given day and average in. If I see a turn as with the gold miners (GDX) and silver (SLV), I’ll buy half a position and scale in the rest. The energy complex is recovering now and provides support for the market. Palladium, an industrial metal, is ahead of platinum (see PPLT), which would be a good trade with greater strength due to the fact that it has not yet recovered. I have a position in GDX that I tweeted last week, but if you have the stomach for it, the junior miners could move even more. They’ve endured a 50% Bear market and are bouncing from the 2010 low (GDXJ).
REITs are very strong and in a Bull 5 market. I’ll be adding my last time to the point of having a full position with another small move up. I added to ITB before housing blasted off, which was based on the technical pattern. The breakout was on Weds. but without conviction. Thursday and Friday were the lift off. If you were watching Twitter last week you may have been along for that trade.
I was also buying more utilities (tweeted!) for both capital gains and dividends last week and completed buying my position (UTY).
I am moving all the major indices to holds, because we are only about 2-3% from the prior highs. The next buys for me are the breakouts.
If you have not seen them, have a look at the charts from this week as well. They are listed on my “feed page” here:
Enjoy your week!
Standard Disclaimer: Remember, it’s your money and your decision as to how to invest it.
The above is the text from the 4-29-2012 “Weekly Wall Street Sun and Storm Report™. To see the current issue and this week’s ratings of all 35 markets I follow and receive the newsletter every weekend, subscribe here:
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