Though there are still some stocks that are just completing bottom formations, others are well above support, and some are close to their weekly Starc+ bands.
As I noted in my recent trading lesson, the Spyder Trust (SPY) had two sharp double-digit rallies in 2012, but each was followed by almost a double-digit correction. I see no reason to think that 2013 will be that much different, so focusing on risk will be essential.
Last Friday's review of the NYSE A/D line (see chart) showed that it was rising sharply, which often means a rally that can last quite a bit longer, as was the case in early 2012.
The Spyder Trust (SPY) pushed up to a high of $148.42 last Thursday after trading in a range for the prior four days. This is similar to what happened from January 3-9. Therefore, we may consolidate for a few days before SPY pushes higher.
This week, the trend line resistance will be near $150, with the 100% or equality target at $150.70. The quarterly R1 resistance stands at $150.58.
The S&P 500 Advance/Decline pushed above the prior highs last week, which is bullish. It is well above its sharply rising WMA.
There is initial support at $146 to $146.50, with further levels at $145. The quarterly pivot is at $142.64, which also corresponds to the daily uptrend, (line b).
The high in the SPDR Diamond Trust (DIA) last week was $136.19, which was just below the September high of $136.48. The 100% target and the quarterly R! resistance are in the $138 to $138.80 area. The Starc+ band is at $139.20 this week.
The Dow Industrials A/D line broke through resistance (line f) in early December. The A/D line moved back above its WMA last week, but is still below its prior peak, as Intel (INTC) and Boeing (BA) are holding it back.
There is support now at $134 to $134.40, with the rising 20-day EMA now at $133.69. The quarterly pivot waits at $131.46.
The PowerShares QQQ Trust (QQQ) made marginal new highs last week at $67.48, which is still below the strong resistance at $68.30 (line a) and the early October highs of $69.80.
The Nasdaq-100 A/D line rebounded after plunging in late December, but has not yet surpassed the December highs. The break of the downtrend (line b) was a positive sign.
The rising 20-day EMA is now at $66.43, with additional support at $65.13, which was the closing level of 2012.
The iShares Russell 2000 Index (IWM) overcame the September highs at $86.96 in early January and continued to make higher highs last week, reaching the trend line resistance (line c).
Both the equality target calculated from the November low to the December high and the quarterly R1 are in $90.45 to $90.60 area.
The Russell 2000 A/D line did make new rally highs, but is still slightly below the September highs and therefore lagging the price action.
There is first support for IWM at the gap between $84.43 and $86.04, with further chart support in the $83.50 area.
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