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You can see on the S&P the lines I have drawn at the all time high resistance which is what we are battling with right now. Bulls have the benefit of the doubt though for several reasons; 1) we have been in a very strong part of a bull market for over a year now, 2) the 50 day average is not declining, 3) we have support at the $1810 area. If you need a fourth reason, just look at the weekly chart. I think a lot of people are looking at $1800 as the short term line in the sand though. In the bonds you can see how that long legged doji I pointed out two weeks ago has affected price up to this point. I said I'd be watching for a breakdown or breakout, and so far it has done neither. Price is contained inside that doji. Also if you draw a fibonacci retracement from the Jan lows, we are sitting at 38.2% retracement with a 50 day average that is moving upward. Gold is being very impressive in 2014. It has broken through the 200 day (so far) without any trouble. Right now we are sitting at the weekly 50 period average so we will see how price reacts to it but any pullbacks I will be watching for $1270-$1280 support to hold as the 50 day continues to rise.
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Internals are still holding up rather well. The only thing that really concerns me out of these three internals is the VIX when comparing it with the S&P. Look at this tweet I made on StockTwits yesterday: VIX vs. S&P. I don't think I am the only person that noticed that over the weekend and the read from it is that people are holding a lot more OTM puts on this test of the ATH than the last one. It has implications but that is all they are until it plays out.
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What I have done here is posted the strongest names without posting those that have run so far it would be considered unforgivable chasing. There are two turnaround stocks that I am watching that I posted, those being CSCO and PXD. Other than those two, the others have been posted for their strength. Some of these names do need to pullback and/or setup but these are the ones I will be watching next week.
Since I have started swing trading again I have been focusing my attention on trying to capture the big moves. It is a much different game than trying to catch the big moves while day trading futures. Here you need relative strength, individual strength, institutions supporting it, patience, good setups, trend etc. Anyway I bring this up because I feel like the 50 day average can show you all of the above and more (in conjunction with price action of course) to catch the big moves. That is why it is now the only average on my daily charts. The other averages I tend to look at (10, 20, 200) work just great, but don't further my plan of capturing the large moves, they are either too long or too short. On top of that I am very comfortable with it, so just letting you all know what I'm doing with my charts and why I feel the 50 day is so important to the way I am trading, and the different ways I will be using it.
If you like this post, you can follow me on StockTwits or Twitter for updates to these stocks and new setups as they come along at: @M5amhan.
Trade well,
-Michael
