{"id":1326,"date":"2010-03-15T13:15:19","date_gmt":"2010-03-15T17:15:19","guid":{"rendered":"http:\/\/drduru.com\/onetwentytwo\/?p=1326"},"modified":"2010-03-15T09:20:31","modified_gmt":"2010-03-15T13:20:31","slug":"climactic-tops-remain-intact-for-now","status":"publish","type":"post","link":"https:\/\/drduru.com\/onetwentytwo\/2010\/03\/15\/climactic-tops-remain-intact-for-now\/","title":{"rendered":"“Climactic Tops” Remain Intact For Now"},"content":{"rendered":"

Just over a month has elapsed since I concluded that S&P 500 was reaching a short-term bottom but would not challenge its 52-week highs (set in January) for “many months to come.”<\/a> On Thursday, the S&P 500 printed a new 52-week closing high by one penny. On Friday, the index made a new intra-day high by a few dollars before closing lower. All this action occurred on light volume – as usual. (Chart not shown.)<\/p>\n

Despite the unconvincing action on the S&P 500, cyclicals<\/a> and consumer-related stocks and indices<\/a> have had very convincing and strong moves upward to fresh 52-week highs. So, I decided to review the stocks whose “climactic tops” helped convince me that sellers were making a lasting statement in January and early February. Interestingly enough, all three stocks\/ETFs remain below their 52-week highs: Intel<\/a> (INTC), Caterpillar<\/a> (CAT), and Health Care Select Sector SPDR ETF<\/a> (XLF).<\/p>\n

Of these three, INTC is the closest to a new 52-week high, and CAT seems most likely to follow the market if it makes a new bullish run from here. XLV is likely a prisoner of news headlines on healthcare reform and should trade more closely to real-time news flow than in anticipation of news as reform efforts reach final stages.<\/p>\n

Here are the latest charts:<\/p>\n

INTC is essentially trapped in a trading range. I suspect a new 52-week high will be just as marginal as January’s. While the NASDAQ was powering ahead on fresh 52-week highs all of last week, INTC has kept pace with the technology index with an overall 4.2% year-to-date gain. I still do not expect INTC’s near-term earnings performance to improve enough to make it worth a buy at these levels<\/a> although the dividend yield remains attractive at 3%.<\/p>\n


\n
\"INTC<\/a>
INTC remains trapped in a trading range<\/figcaption><\/figure>
\n<\/center>
\n<\/p>\n

With Friday’s 2.5% gain on decent volume, CAT finally looks poised to retest its 52-week high. I am watching this one closely. I like to get (net) long CAT as one way to get long the market or to hedge bearish bets. CAT’s climactic top was extremely dramatic and convincing<\/a>, so new highs for CAT would mark a very bullish moment for the market in general.<\/p>\n


\n
\"CAT<\/a>
CAT looking more bullish but must crack overhead resistance soon<\/figcaption><\/figure>
\n<\/center><\/p>\n

XLV’s top looks most likely to hold of the three charts reviewed here. The selling after January’s highs was massive and sustained. For now, I am looking for new entries for short positions in XLV and\/or its health insurance components. XLV has done little this month. It is in a technically neutral position although it rests comfortable above support at the 50-day moving average (DMA).<\/p>\n


\n
\"XLV's<\/a>
XLV's top remains firmly in place<\/figcaption><\/figure>
\n*All charts created using TeleChart:<\/strong> <\/a>
\n<\/center>
\n<\/p>\n

Be careful out there!<\/p>\n

Full disclosure: net long CAT, long SSO puts<\/p>\n","protected":false},"excerpt":{"rendered":"

Just over a month has elapsed since I concluded that S&P 500 was reaching a short-term bottom but would not challenge its 52-week highs (set in January) for “many months to come.” On Thursday, the S&P 500 printed a new 52-week closing high by one penny. On Friday, the index made a new intra-day high … Read more<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[62],"tags":[64,63,301,222,221,302],"class_list":["post-1326","post","type-post","status-publish","format-standard","hentry","category-technical-analysis","tag-cat","tag-caterpillar-inc","tag-health-care-select-sector-spdr","tag-intc","tag-intel","tag-xlv"],"yoast_head":"\n"Climactic Tops" Remain Intact For Now - ONE-TWENTY TWO: Trading Financial Markets<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/drduru.com\/onetwentytwo\/2010\/03\/15\/climactic-tops-remain-intact-for-now\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\""Climactic Tops" Remain Intact For Now - ONE-TWENTY TWO: Trading Financial Markets\" \/>\n<meta property=\"og:description\" content=\"Just over a month has elapsed since I concluded that S&P 500 was reaching a short-term bottom but would not challenge its 52-week highs (set in January) for “many months to come.” On Thursday, the S&P 500 printed a new 52-week closing high by one penny. 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