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By Susanne Owen, Trading Nymph
Posted on May 7, 2010
Well, we got that correction this week -- boy, did we get a correction! So with that out of the way, let's look at what is coming up for next week.
Believe it or not, next week may actually be a bit dull. The markets around the world dropped hard and fast yesterday, and we need to form a base before we can move much more in either direction. Because the week after next is options week, the bias will be to the upside once we rest and chop around a bit to about SPX 1100. As I mentioned in my past articles, you need to watch the Shanghai Comp for your direction. Last night, it was able to hold its September 2009 support at about 2667. If that support fails, watch out -- we could be heading lower.
For Monday, we have the Bank of England's interest rate announcement. Rates should remain the same, and with British elections resulting in a hung Parliament, I doubt that any new policies will result.
On Tuesday, we have the German Consumer Price Index, which should give us insight into possible inflation problems there, as well as UK industrial production data for March. With China slowing down, the March numbers will probably be discounted as lagging. In the U.S., we'll get pending home sales data and the three-year Treasury note auction. The average for that auction is a bid to cover of 2.72 and high yield of 1.42%. With China's market selling off, we'll be watching to see if the money will go into U.S. treasuries.
Wednesday brings the 10-year auction and the trade balance report on the balance between exports and imports of total goods and services, which has been trending down. We'll also get the FMS' monthly budget statement, which will summarize the financial activities of federal entities, including the Federal Reserve Bank. The reports could move the U.S. dollar down a bit, creating the start of a possible rally attempt. In addition, the UK will report its version of nonfarm payroll data, so we can see how its work force is doing and how bad its unemployment is.
Thursday, Switzerland and Germany will be celebrating Ascension Day and will be closed. On Friday, the U.S. retail sales numbers come out, along with industrial production data. The market has probably already priced in a beat of the retails sales number based on the run-up in retail store stocks that we've seen. For industrial production, the market has probably already priced in an in-line or better-than-expected report number on the positive data that has already come out from the Purchasing Managers Index and other sources.
Here are some of the companies that report this week. For Monday, before the bell I want to hear from Horsehead Holding (ZINC). Using Fibonacci analysis, ZINC has support at 7.58 and resistance at 14. I also want to hear from foodmakers Dean Foods (DF), which has support at 11.50 and resistance at 19.73, and Tyson Foods (TSN), with support at 16.63 and resistance at 20.06. It's interesting that DF really didn't join the 2009 rally much. After the bell, we'll hear from McDermott (MDR), which has support at 20.20 resistance at 29, and Fluor (FLR), which has support at 43.80 and resistance at 55.43.
Tuesday is Spec Day. Before the bell we have JA Solar (JASO), which has support at 4.80ish and resistance at 7.42, and after the bell we have Rick's Cabaret (RICK), which has support at 8.80 and resistance at 16.06; GT Solar (SOLR), with support at 4.56 and 6.91 for resistance, and the Mouse, Disney (DIS), with support at 32.50 and resistance at 37.46.
On Wednesday, we have Macy's (M), which has support at 20.88 and resistance at 25.80 -- that's the 50% level, which is a difficult level to take out. After the bell comes Cisco Systems (CSCO), with very strong support at 23.80 and resistance at 26.28. Silver Wheaton (SLW) also reports after the bell on Wednesday, with support at 15.83 and resistance at an all-time high of 19.50. SLW does not have a good risk/reward ratio, and it appears it could possibly pull back when it reports. There's also Whole Foods Markets (WFMI), which has support at 34.68 and resistance at 43.19, a difficult level.
On Thursday before the bell, Teekay Shipping (TK) reports, with support at 22.90 and resistance at 27.86-ish, as well as Urban Outfitters (URBN), with support at 35.04 and resistance at an all-time high of 40.84. Normally all-time highs are the toughest of resistance points and After the bell we have Nvidia (NVDA), which has support at 14.50 and resistance at 18.47-ish, and Nordstrom (JWN), which has support at 39.42 and resistance at 48.28ish.
On Friday J.C. Penney (JCP) reports before the bell. Its support is at 26.90-ish, with resistance at 30.65.
As for commodities, gold tends to pull back a bit once the meetings of the European Central Bank (which met on Thursday) and the Bank of England are completed. Copper should continue to be soft. The market has had one heck of a movement this past week, and we really need to let it rest. With not that much economic data and with earnings reports slowing down, I would expect it to bounce around the SPX 1110 range and then start to move itself up to the 1165-ish range, but give it time. I would watch some of the small spec stocks reporting this week, especial techs plays, to play a potential relief rally that could form later in the week.
At the time of publication, author had no positions in stocks mentioned.
