After such a breakout, a pullback to the breakout level would not be unusual. And it coincides currently with the 20-day EMA at $94.11.
The measured target from the flag formation is in the $99 to $101 area.
The daily OBV broke through the resistance (line c), completing the corrective pattern, and is now acting quite strong. The pullback in the OBV to its WMA was a good buying opportunity.
The Russell 2000 A/D line also made new highs last week. First support sits at the uptrend (line e) and the March highs.
The iShares Dow Jones Transportation (IYT), after completing its the continuation pattern the previous week, accelerated to the upside. It was one of the strongest sectors, up 2.6% for the week.
Both the weekly and daily OBV ( not shown) are positive, so further gains are likely. The quarterly R1 has been surpassed, with the R2 resistance now at $120.69.
The small caps acted the strongest last week, as IWM was up about 2.2%, almost double the gains of SPY and QQQ. The Select Sector SPDR Consumer Discretionary (XLY) and Select Sector SPDR Industrials (XLI) were both up 2%.
The Select Sector SPDR Health Care (XLV) rebounded last week to close higher, and the volume was quite heavy, confirming the new all-time high.
As I discussed last week, the Select Sector SPDR Materials (XLB) was on the verge of an upside breakout, and it was in fact able to close above resistance (line a). The upside breakout was confirmed by the OBV, which moved through its resistance (line c). Important support is now found at $38.47, which is the quarterly pivot.
Crude oil had a wild session Friday. The July contract dropped as low as $93.62 before closing back above $96 per barrel. The close was just barely back above the quarterly pivot at $95.91.
A close above the early April high at $98.22 is needed to reassert the uptrend. The OBV is above its WMA, and shows a pattern of higher highs and higher lows (line d).
The technical action of the precious metals with Thursday's close suggested the rally was running out of steam, but I did not expect such a sharp drop. The Spyder Gold Trust (GLD) closed above its lows, but technically there are no signs of a bottom yet.
The Week Ahead
It is still a tough market. Despite further new highs Friday, finding good new stocks or ETFs to buy with reasonably low risk is still difficult. In last Thursday's column, April's Picks & Pans, I took a look at two of my winners and two losers from April's columns.
In my regular monthly analysis of the Dow Industrials, I made a few new recommendations, but my buy levels have not yet been hit. I am still waiting for a pullback in some of the global ETFs, especially those for Japan and China, to establish new positions.
In my update of the Charts in Play Portfolio, I raised some more stops and put in a few more profit-taking levels. Despite the high level of cash, it is performing fairly well.
With another strong close Friday, the temptation is to jump in. Don't-there will be better opportunities down the road.