Weekly Market Review: April 18, 2009

The market has continued to chug along upward this week. In last week's review, I said the market was obviously in a short term rally run. And just like last week, this up run is looking weak from the indicators (Figure 1). Yet, as weak as it might seem, the fact is that the market is breaking resistances one after another. We ended the week on another significant resistance at 875 on the S&P 500. This is definitely a level to watch next week. However, do note that we have tested this level on a lower volume on Friday. So it's likely that we'll fail to break this resistance.

On the other hand, from Figure 2, you can clearly see that we've been adhering to a tight uptrend channel formed from the beginning of March. From that chart, we can glean that our support is about 860. Thus, our narrow trading range is 860 - 875 in the short term for next week. And the major levels would be 830 and 900, from long term lines shown in Figure 2.

My conclusion is that we'll be seeing 830 before 900 from the weakening rally. However, I've been proven wrong many times before. In any case, just watch the levels I noted and let the market tell you where it is heading.

[caption id="attachment_1265" align="aligncenter" width="500" caption="S&P 500 ETF"]S&P 500 ETF[/caption]

[caption id="attachment_1266" align="aligncenter" width="500" caption="S&P 500 ETF"]S&P 500 ETF[/caption]

GICS Sectors Review

On the 6-month and 3-month charts, it's easy to see that although the Financials have been playing catch-up lately, they still have a lot of grounds to make up for. The Telecoms still remain the top performer with the Techs in the second spot.

Notice that on the 5-day chart, we can see the top performers (Financials and Industrials) have retraced in the last hour for most of the week. This is a bearish sign.

[caption id="attachment_1256" align="aligncenter" width="500" caption="6 months: XLE XLB XLI XLY XLP XLV XLF XLK IYZ XLU"]6 months:
XLE XLB XLI XLY XLP XLV XLF XLK IYZ XLU[/caption]

[caption id="attachment_1257" align="aligncenter" width="500" caption="3 months: XLE XLB XLI XLY XLP XLV XLF XLK IYZ XLU"]3 months:
XLE XLB XLI XLY XLP XLV XLF XLK IYZ XLU[/caption]

[caption id="attachment_1258" align="aligncenter" width="500" caption="5 days: XLE XLB XLI XLY XLP XLV XLF XLK IYZ XLU"]5 days: XLE
XLB XLI XLY XLP XLV XLF XLK IYZ XLU[/caption]