Dow Jones and S&P 500 closed at records highs, Japan lead gains in Asia with 1.95% gains, Europe shares open higher and continue a world-wide rally. The market had finally frustrated enough traders that it could be time for a cleaner move. The S&P (+1%) and Dow (+0.7%) closed at new record highs, but the beaten down NASDAQ (+1.8%) was by far the best performer yesterday as many downtrend tech stocks were finally able to release some pressure.
Overall you have to take stock specific approach and be willing to buy dips in strong stocks if you want to be successful in this tape. Today, we will look to the long side.
Markets act very healthy as money rotates to safe havens, high dividend, large cap stocks like Microsoft (MSFT). On 7 of May tech giant reversed from lows and closed near highs, means that buyers took control and regained important support @ $39. Now, it reclaimed short term moving averages and I want to see some construction above to continue its up move to resistance zone at $41.27-41.65.
Cisco (CSCO) is component of both indexes Dow Jones and S&P. It built nice inverse Head and Shoulders pattern with neckline @ $23.60ish area. And we have series of three higher lows: first is bottom @ $20.22 then right shoulder with support @ 22.30ish and yesterday it closed strong well off the lows, bounced from $22.50ish support of that nice upper-level base, regained 8 and 21 moving averages. It would be healthy to see some construction above short term moving averages and continuation move to test neckline @ $23.60 with potential break up. Macro target is $26.50-27.00, but till then I will navigate that potential trend up with active approach. We have earnings report tomorrow after the market close.
Silver is hovering around on major support that is intact since July 2013. It is not ready yet, but definitely something to keep on your radar. The break above $19.75ish will attract more active buyers. Next resistance is @ $21 where 200 MA then $22 February high. Break below $18.217-$19 support zone could lead to down momentum as buyers who relied on that level of support will be forced to cover their losing positions.
EUR/JPY broke down consolidation support that was intact since the mid of March, important level for buyers. My plan is to sell from resistance zone when I will get some confirmation from price. Selling zone is from 140.800 to 140.982 then we have resistance @ 141.200. Recent momentum up could be faded as it is still just 50% retraction from big down move off the highs at 142.373.
Please note: While I provide a concrete action price, target range and stop level in my Trade Idea of the week, every trader should manage his or her own trades according to his or her own time-frame and strategy. Within the Opteck we have a team of contributors who would potentially manage this type of trade in very different ways, and there is no right or wrong way.