The Trader Daily

 | Apr 22, 2014 | 7:30 AM EDT  | Comments
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Stock quotes in this article:

spy

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QQQ

,

DIA

,

IWM

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cvx

,

hal

,

OIH

,

bhi

,

xle

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wfc

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ubs

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jpm

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c

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usb

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gs

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gs

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anr

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wlt

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aci

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btu

Given how many of the world's stock markets were closed on Monday, it probably shouldn't come as a surprise that our markets were incredibly dull. That said, earnings season kicks into full gear over the next four days, so I'm sure the remainder of the week will be sufficiently active.

Aside from the SPDR S&P 500 (SPY) and SPDR Dow Jones Industrial Average (DIA) re-entering their multi-week balance zones little has actually changed in regards to any of our major market ETFs. We'll maintain a neutral to moderately bullish bias in the SPY and DIA as long as they're closing above their respective 50-day simple moving averages (SMA). While a more defensive (bearish) posture is appropriate in the Powershares QQQ Trust (QQQ) and iShares Russell 2000 ETF (IWM) until they've cleared their April 10 highs and 50-day SMAs.

 

Daily Chart of Major Indices
eSignal

 

As for the SPY, day timeframe traders should expect dip buyers to remain active with all trading above $186.43. As long as demand remains intact between that level and $186.60, my baseline expectation is for numerous attempts to build value and break higher from $187.15.

Failure to hold the line near $186.43 doesn't necessarily put an end to our multi-day bounce, but it does encourage the day timeframe trader to shift his bias in favor of a slide toward $185.98 and $185.55. I still believe a close under the 50-day simple moving average is needed to put an end to the current bullish momentum.

 

5-Minute Volume Profile SPY
eSignal

 

Little has changed in regards to a sector-wide analysis over the past few days. That which was strong continues to outperform; that which was weak continues to struggle.

Aside from the obvious out performance among consumer staples and utilities, the energy sector continues to power forward. The Energy Select Sector SPDR Fund (XLE), led by ConocoPhillips (COP) and Chevron (CVX), and Market Vectors Oil Services ETF (OIH), led by Baker Hughes (BHI) and Halliburton (HAL) have been huge out performers over the past few weeks.

Keep in mind that much of the energy sector is now stretched and in need of a rest, I'd expect a persistent bid to remain under these two ETFs (and their underlying components) following any short term profit taking.

As far as what's weak, I think we can all agree that home builders and banks are in dire need of some love. Stocks like Wells Fargo (WFC) and UBS (UBS) are holding up OK. But names like JP Morgan (JPM), US Bankcorp (USB), Citigroup (C) and Goldman Sachs (GS) seem incapable of attracting any sort of multi-day bid. As discussed in recent reports, I continue to believe banks and home builders will be popular areas for short sellers to hammer on any indication that the broader markets are ready to resume their short term downtrends.

 

Daily Chart Multi-Sector View
eSignal

 

When was the last time anyone had anything nice to say about the coal sector? I won't go so far as to say everything related to coal is ready to bounce, because metallurgical specific coal stocks like Alpha Natural Resources (ANR) and Walter Energy (WLT) look questionable at best. Thermal coal, however, has caught my eye.

The two coal stocks on my watch list are Arch Coal (ACI) and Peabody Energy (BTU). As you review the chart of BTU below, pay particular attention to the stock's successful re-test of its 50-day simple moving average on April 15 and April 17. Aggressive traders may forgo additional information for the benefit of a better price, and buy now.

While other, more conservative traders might prefer to wait for a close above $18.20 (the April 8 intraday high) before getting long. In any event, I believe a close above $18.20 shines a light on $21 to $21.25. A close under $16.30 would stop me out of any bullish BTU position.

 

Daily Chart BTU
eSignal

 

Additional Notes:

1. The iShares Biotechnology ETF (IBB) was trading higher after Monday's close and is quickly approaching resistance near $234 to $235. Keeping in mind that very little resistance lies between $235 and $245, my inclination is still to sell the IBB into $235.

Any trading or volume profile related questions can be posted in the comments section below, emailed to me at parkcityyeti@gmail.com or posted to my twitter feed @ByrneRWS

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