Friday's Green Day Cannot Give The Bulls A Victory

Scoreboard: Green day but bulls cannot claim a clean victory. The day's outcome was in jeopardy with minutes to go, a rumor broke out about Intel buying Altera. Intel then rocketed +4% higher (which is not a typical reaction to the acquirer). Intel is a heavy weight in all major indices so propped up indices that were flat into solid greens to save the day. The reaction is likely overdone; I am skeptic of a rally in Apple rally on the Intel news. Here is the reaction in Intel (right) and the Nasdaq minis (left):

What makes this rumor even more important and takes away from the bulls' credit is that minutes there after, Yellen's statement came out and it was bearish. I am convinced that had the markets not bounced on Intel, the day would have ended in the red. ( Important note about Yellen lower). >>> DOW: +.19%, SPX: +.24%, NDX: +.41%, RUT (small caps): +.68%. * Healthcare/Biotech sector was strong all day providing a market prop but then when Intel popped it also rendered the Chip sector as another prop which was too much for bears to fight last minute. Next week: Going into Monday, the set up in the options markets looks the same as this week so we are likely to meander. Headlines change the game in either directions. Since we traders mostly trading sentiments, markets are always one headline away from a correction or another new all time high. So active traders can sell premium to create income during these meandering weeks but most investors are better off balancing their folios. Long portfolios needs new short positions to balance or need protection. This can be easily accomplished using the options markets. The VIX is one tool but there are other leveraged ETF's that can offer limited cost downside protection. There are also some tickers that are either over extended or wounded so more vulnerable than others. In case of a sell off they will lead down. The oil sector may include many who are teetering. This is not the time to load up on new longs nor is it time to be heavily short with no room for error. ALL trades should leave margin for error. Luckily the options markets offer hundreds of strategies that can implement any macro thesis. Variables: * Political: WE have too many serious global issues that markets are ignoring especially in the Middle East. These can quickly develop into major problems that would certainly cause a sell off. Just because the headlines are not on cnbc doesn't mean the risk doesn't exist. So I make room for potential flare ups that make it onto the cnbc ticker tape at any time. * The economy: This coming week we have important economic reports especially in the US. We need to see that we can sustain the growth rates this year. * Rate Hike/Fed: With 15 minutes til close today Yellen released a scheduled statement. In it I picked up on 3 new parts that are potentially game changers: *** Yellen said that she cannot wait until inflation is back to 2% before moving. This is a very bearish note that she's never said before. In fact up until now she always reserved the right to ignore HOT inflation. That's a 180. *** She also said she expects a hike "this year." I don't remember her saying that either. Last time she spoke she said not April. Many experts are expecting the hike in 2016. This closes the door on that possibility. *** But then she throws a bone to the bulls by saying: that she could 'stop, speed up, pause or REVERSE the process. REVERSE? that's = QE. I did present that notion in our write ups before she spoke last time but said it was a long shot. Now she verbalized it. That would cause me to shift my macro thesis. * Currency: No major headlines today impacting markets markedly. * EQE: Data dependent. Ends Sep'16 or sooner. * OIL: Crashed down close to 48again. So much for the bounce. This on word from GS that the Yemen skirmishes are not too important. I disagree. * TLT: Exploded higher resuming its breakout scenario. * TNX: Crashed -3% from a promising day yesterday. Ranges: All the ranges are playing out within our expectations with regards to open interest AND trends. Update to follow. This week the set up was bullish but the bulls failed to capitalize. Next week we are set up to meander if left alone with out any headlines. Even with today's greens' the indices closed red for the week. Here are the trends. We are skirting important levels here and a downward break of any of the lower supports could invite more sellers. Small caps holding up best so far with regards to recent ascending trends. QQQ (Nasdaq) second best and SPY closes to trouble zones. Apple will play a big factor in this next week. Today Apple did not do well -1$.

Notes on a Few Tickers: - AAPL: Range is tightening with lower highs knocking on floor board. Bulls do not want the board to break and become a trap door.

- SOX: Yesterday's candle broke support so technically could go to 650. Recovered well today. If markets in general hold, SOX has a chance at holding. But still vulnerable.

- DLTR: Nice uptrend but needs to hold the green line or it will revert to lower ends.

- COST: 145 needs to hold to support the ascending channel. Also shorter trend holding here so can rally if markets cooperate.

- SBUX: Looks like it's trading the broadening ascending wedge (green). Now needs to hold the yellow ascending trend to revert higher. Earnings soon.

- STZ: If loses 112.5 orange line can come back into view 103ish.

- UNH: Rinse and repeat. Drops then rallies up from the orange ascending trend line. Strong sector.