- Stocks close higher after an up and down session, but the move already looks a bit winded.
- Jobless claims a bit better, but hardly ‘reverse’ the six-week climb higher.
- Existing home sales fall, leading indicators fall. Quarter 2 is worse than a pathetic Q1.
- It is up to the leaders to keep the rebound running though Friday may not provide much buying opportunity.

MARKET SUMMARY

Rebound gets a bit wishy-washy.

As you can see from the intraday chart of the SP500, it was a rather ragged session. Futures were up and the indices did start higher on the day. They rallied and it was a nice move. It was a continuation. There was the Tuesday reversal and the Wednesday gains, and Thursday was a continuation of those gains. Everything was going according to plan as the SP500 bounced off of that ABCD pattern. Volume has lagged. It has not been a huge move to the upside, but I was not expected it to be tremendous. It would be nice if it was strong. I was looking for a move back up to that April peak as the target. Light volume is not surprising, but it is disappointing that the market cannot put together good volume on the upside and perhaps break the stock market to new rally highs.

The indices closed higher. NASDAQ, +0.3%; SP500, +0.2%; Dow, +0.36; SP600, +0.2%; SOX,   -0.85%. SOX finished down thanks to a GS downgrade of the entire sector to “cautious” based on a belief of excessive supply of chips. There was a specific shout to INTC with a downgrade of that stock in particular. That did not do a lot of damage to INTC itself, but it did not help the SOX overall; it posted a modest decline on the session.

By the end of the day, stocks managed to finish to the upside. It was back and forth. There was a selloff after some weak economic data, but mid-morning often turns out to be the fulcrum for the session. There was a doji a long shadow and the reversal. That set off a rally back to the upside in the afternoon, though stocks never did eclipse their morning highs. They did close with gains, and that is positive, but it was a back-and-forth session where the sellers and the buyers knocked each other around. Was no clear, continued, strong run to the upside that you would like to see when a move is young and showing strength.

SP500 stalled out, showing its candlestick doji at the February high. This may just be an interim doji. A continuation doji is often case, but the volume was low and it came in at the January high and stalled out. That is a bit of a concern and something to watch as the market continues trying to rally back up to the April peak on Friday and early next week.

FRIDAY

There is no economic data out on Friday. That does not mean we will not get a lot more news hitting the wire. It seems like every day there is a bunch of data some coming out, whether it is earnings, word with respect to an individual stock, or something happening with a company or overseas. In any event, this could be a Friday where we do not do a lot.

We have had a decent bounce up off the D-point, the recent lows in the ABCD pattern. We have had some good stocks make moves to the upside. Maybe we will get a bit of a pullback on these as we got a bit on Thursday with some stocks. That might give a better entry point, and we can pick up a few positions. I am not looking to do any wholesale buying on the session. We have picked a bunch of good positions. They are leadership stocks and they are making their moves. If they will continue to make their moves, they will do so either Friday or early next week.

Friday may not be much of a day. I would love to see it shake off this doji that was shown on Thursday and continue the move to the upside. We will have to see what happens. Again, we may get a few buys out of it, but I am just not too wild about going to town with a lot of buys at this level after a good bounce off of this D-point and facing this resistance. I would like to ride them up to the top. See what we can get, hit our initial target, take some gain out of the table, and then see if the indices can make a break to the upside. In other words, the risk/reward has been skewed a bit. There are still stocks in position to buy, but after a reversal on Wednesday and a couple of upside days, Friday may not be the best time to buy in even if we get a pullback. I just want to see what happens next week with that.

I do not anticipate doing a lot of buying on Friday. We have taken some good positions. We have some great positions that we have been riding higher, and we will continue to do so. If we get a break higher, we will probably let them run higher. We will probably not take any gain even if we do get a good break. That would mean we will likely run back up to the April peak and would get a better exit point up there for stocks that have June options. We are watching a few of those.

That becomes somewhat important because the market does flip over into the June expiration come Monday. That can impact your options to a certain extent. If they are going nowhere, it tends to bleed off a bit of time value over the weekend. We will be looking at some stocks that may not have been moving much that have June options. If we feel like it, we could bank some more gain on those.

I do not mean to sound boring about Friday. With a good start to the rebound under the belt, and the doji on Thursday, I am just not too wild about getting into a lot of new positions. That is what happens sometimes. Again, we took good positions early this week, and we will let them run if they will. We will let our other positions continue on. Over the weekend, we will probably look at putting on some downside plays on the report so we can be ready in case this thing caps out. Or, if the move does continue and it makes this 20-point run up to the April peak, if it reverses at that level we want to be ready to play the move to the downside.