S&P 500 And Big 10 Weekly Outlook - March 5, 2012

It is so tempting to try and pick a top in this already over-extended rally, but it seems of no use. The rally just keeps going and going like the energizer bunny. However, many turns in the market are signaled by double or triple tops (or bottoms for that matter). Alas, we have yet another one in the S&P 500 at Wednesday's high (1377.25) and Friday's high (1377.25). So for you longer-term swing traders that are a glutton for punishment, the market has provided a justifiable reason for a short entry and a justifiable reference point for an exit. With that being said, if you missed shorting the market on the upswing, where do you get short if the market retreats? In my opinion, you need to patiently wait for a breach of 1350.25 on a closing basis. Of course, you may be giving up 18 points or so on the entry, but you may be avoiding another losing trade on the short side. One thing is for certain, the market cannot continue in the squirrely 10-15 point upside biased ranges forever. One of my favorite Wall Street sayings is “what a bull eats in month, a bear scarfs in a day”... Or did I just make that up on my own. Exxon Mobil

has failed to confirm this move by refusing to make a new 52 week high under any circumstances. Large institutional sell orders, one right after the other, has plagued this issue all through the 87 handle. Finally some of those sellers gave up on selling into strength, and whacked XOM down to 85.85 (weekly low) on Friday, before recovering to settle at 86.33. Our buddy Warren Buffett has exited this issue and the handwriting may be on the wall. If 85.85 cannot hold next week, say hello to 84.00 and 82.00. Expect sellers to be lowering their offers in XOM to high 86's and low 87's if this issue can muster any rally. Along these lines Chevron Corporation

provided a nice look at the all time high. Topping out at 110.92 on Wednesday (.07 shy of all time high) and then retreating. The level to short or sell this issue on weakness is much better defined than XOM. 109.00 sticks out like a sore thumb. With the last four lows between 108.92 and 109.18 you could not ask for a better set up to bail or get short if 109.00 (Friday's low) is taken out. For this issue, I would approach that level on an intraday basis, because if you wait for a close under 109.00 you may be selling at 107.00. On the upside, there will be more offers to climb though if and when CVX can get back to the 110.00 handle. If I owned Apple

, I would be scared. With just over a 4 point range on Friday and a double top at 547.61 and 548.21, a short-term top may be in. Coupled with Steve Wozniak's call for $1000.00 in this issue (why CNBC would mention that is beyond me), almost calls for a revenge trade for any daytrader that has refused to participate in the 140 point rally since the beginning of the year. Below 535.00, AAPL has 500 written all over it. On other hand above 550.00 is 1000.00. Get your order in at 999.999876531 to beat out the high frequency traders. Oh that's right, the public cannot enter orders at sub-pennies, only the big boys can. Since I am trying to pick tops in several of the Big 10, let's take a look at International Business Machines

. The old drawn out rounding top from 198.47 to 199.23 can only mean one of two things. Either IBM is going to blast through 199.23 and make 200.00 just another whole number, or crack 196.00 and meander its way back 190.00. Since it settled just off the high of the day on Friday, the first scenario seems much more likely to occur. From one technology stock that settled near the top of its range on Friday, to another that closed on the bottom of its daily range. Thus, what to with Microsoft

. For some reason, this whole number of 32.00 is not going to be as significant support as 31.00 and 30.00 on similar occasions. What is the driver here, Windows 8 or a late attempt to enter to cell phone market? In my opinion, MSFT should focus their efforts in other areas, as opposed to entering the crowded cell phone market. For crying out loud, when my Blackberry dies again, I may even consider purchasing an I-phone. Lucky for me, my daughters and wife will be able to teach me how to use it. 32.44 is the level to focus on if a rally ensues and unless 31.85 is taken out, the upward bias is still in tact. Procter & Gamble

was able to make a new 52 week high (67.77) by a nickel, and then pulled back. Here is another issue that has been greeted with gigantic institutional sell orders all through the 67 handle with many more resting further up, starting at 68.00. The boost early in the week was a carryover from the previously announced cost-cutting plan. Once that euphoria dissipated, the technicals took over. Expect rough going again for PG if it can climb back into the 67 handle. On the downside, 3 of the 4 previous lows have been between 66.40 and 66.54. Therefore, if that area is taken out, PG may slide to the bottom of the recent trading range in the mid 64's. Johnson & Johnson

has a similar technical formation to PG. The last four lows have been between 64.50 and 64.71 with the weekly low just under that 64.02. On Monday it appeared that JNJ was actually going to trade in a handle outside of 64,65, or 66 for the first time since mid-December. However, the buyers stepped in and nudged JNJ up to 65.42, before retreating once again. One day this issue is going to break out of the 64.01-66.32 trading range, and find another area to grind in for a few months. At this time, it seems the bounces off the bottom of the range are becoming less powerful. Another week and more of the same for General Electric

. Still trying to recover from lost ground after going ex-dividend, the stock failed to approach 19.50 (the high of the move), and failed to match its July high of 19.53. On Friday, GE was particularly weak and even the high frequency traders became exhausted buying at 19.00 and capitulated to send GE to a 10 day low. Similar to XOM, GE made a new weekly low on Friday in a mixed market. At this time, as long as 19.50 holds this issue is poised to test the bottom of its trading range since early January at 18.50. Perhaps in another week or two. AT&T

was one of the best performers in the Big 10 besides Apple and Pfizer (which had a shocking move). The rally was slow and steady all week and aided by changes in data plans on Friday. T was able to test 31.00 before falling back to settle at 30.87. Expect that level to be minor resistance early in the week and major resistance can be found at the July high of 31.78. On the other hand, be careful of the PG affect on this stock. In other words, how much is the data plan changes really going to add to the bottom line? From what I have read, there are only slight changes to curtail data hogs. For me, I would rather go to the dentist than stream movies and television shows on my cell phone. Expect minor support at Friday's low of 30.60 and major support at 30.20. Pfizer

was able to shrug off major sell imbalances early in the week and rally as high as 21.65. Above 21.65 expect major resistance at 22.00 up to the high of the move at 22.17 (which was also nearly a four year high). On the downside, expect major support again at 21.00 down to the weekly low of 20.75. In closing, the rally appears to be losing some steam, but how many times have you heard that in the past few months. With earnings season nearly complete, the market will be searching for a new driver to force the S&P 500 through its major resistance at 1377.25. Above that level, expect more resistance at the May 2008 high of 1387.00. On the downside, 1350.25 needs to be taken out before a meaningful correction can take place.