Market Overview

The Viper Market Outlook For The Week of June 5th

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The market’s mild pullback early in the week was consistent with the bullish technical readings though only the small cap IWM and NYSE Composite made it to stronger support before turning higher. The Russell 2000, Dow Transport and Dow Utilities all gained close to 1.7 percent while the S&P 500 was up just under 1 percent.
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The weekly market internals were strong again last week with 1976 stocks advancing and just 1109 declining. The NYSE Composite pulled back just below the 20 day EMA on Wednesday before it accelerated to the upside completing the trading range, lines a and b. The upside targets are in the 12,000 – 12,200 area. The number of NYSE stocks making new 52 week highs surged last Thursday breaking the downtrend, line c.
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The weekly S&P 500 A/D line had broken out to the upside in late May and the SPDR S&P 500 ETF Trust (NYSE:SPY had completed its trading range. The daily S&P 500 A/D line broke out to the upside on May 22nd (point 1) as I noted in my May 23rd tweet. The SPY did not break out of its trading range (lines a and b) until three days later as once again the A/D line led prices higher. The A/D line is well above its strongly rising WMA.

The daily starc+ band is at $245.28 with monthly pivot resistance at $249.75. There is minor support now at $241-$242 area with the rising 20 day EMA at $240.35.
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The PowerShares QQQ Trust, Series 1 (ETF) (NASDAQ: QQQ)was up 1.60 percent last week as it again closed at the weekly starc+ band and reached June’s initial monthly pivot resistance at $143.47. The upper boundary of the trading range, line a, has also been reached. There is further pivot resistance at $145.64.

The move in the Nasdaq 100 A/D line above its resistance, line c, in early January confirmed the bullish outlook. The A/D line made a new high again last week as it has been accelerating to the upside. The daily Nasdaq 100 A/D line also made further new highs last week. There is initial support at $140.50- $141 with the sharply rising 20 day EMA at $139.43.
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The iShares Russell 2000 Index (NYSE: IWM) dropped to a low of $134.64 and held above the recent low at $134.23 before turning higher. IWM closed well above the flat 20 week EMA and the prior three week highs. There is next resistance at $141.82 with monthly pivot resistance at $145.37. The weekly starc+ band is at $146.46. A completion of the trading range has upside targets in the $150-$152 area.

The Russell 2000 A/D line has moved further above its WMA and is very close to breaking through resistance at line c. The weekly OBV has turned higher and should move above its WMA with a higher close this week. The relative performance has not yet signaled that IWM is becoming a market leader but it may in the next week or so. Viper ETF investors and traders went long IWM on the pullback last week.

Interest Rates & Commodities

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The yield on the 10 Year T-Note dropped last week below the April low of 2.177 percent which reaffirmed the negative trend and downward momentum. The major 38.2 percent support is at 2.133 percent with the 50 percent support at 1.981 percent.

The former downtrend, line a, is now below 2.000 percent. The MACD turned negative on February 17th (point 2) which reversed the buy signal from August 2016, point 1. The daily momentum is also negative and the completion of the two month trading range has downside targets in the 2.00 percent area.

As I noted last week the technical outlook for crude oil was not changed by the rally from the May lows which suggested that a drop back or below the recent lows was likely. Crude oil was down 4.3 percent last week with monthly pivot support at $44.60.

What to do? The bullish action of both the daily and weekly A/D lines does favor higher prices in the week ahead but the technology stocks are extremely overextended so we may see some sector rotation over the next few weeks. The strong rebound in the small caps suggests they may be ready to lead on the upside but a further rally is needed to confirm.
There are a number of sector ETFs that have either just broken out to the upside or are on the verge of completing their trading ranges. Given the market’s recent gains a 1-2 percent pullback is possible at any time but it should be a buying opportunity.

Viper ETF subscribers are long technology, health care, materials, industrials, biotech as well as positions in the emerging markets and overseas markets.
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There have also been a number of good stock trading opportunities over the past few weeks as there have been some classic buy setups. I would suggest you look for stocks that have consolidated after making new highs earlier in the year.

A good example was Cintas Corporation (NASDAQ: CTAS) which broke its downtrend, line a, in late May and retested the breakout level last week (see arrow) which created a good trading opportunity.. Both the relative performance and on balance volume had confirmed the breakout my moving through their resistance. This gave buyers more confidence.
If you are interested in specific buy and sell advice you might consider a one-month investment of just $34.95 for either the Viper ETF or Viper Hot Stocks service. Both services include two in-depth reports each week and subscriptions can be cancelled on line at any time.
 

Posted-In: contributor contributorsTechnicals Trading Ideas General

 

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