Markets need to rest. They are making new highs, it seems, every day. But, like stocks, they cannot go straight up and it would be much healthier if they paused and consolidated. If they keep rising too fast, there is the danger they will come down just as fast. But remember the trend is your friend. Pull backs are not the end of the trend.
The Russell 2000 (IWM) looks to have formed a 4th wave consolidation over the last several months and last week popped to the upside of the wedge formation it formed.
Small cap stocks may be finally catching up to the rest of the market.
The Transportation index, confirms daily, the Dow Industrial index new highs. When the two are in sync then that is a Dow Theory buy signal. And the Tranny is super strong.
The semiconductor sector (SMH) appears to be the weakest of the sectors I follow. But it is at the bottom of the up trending channel line and recently broke the declining tops line and lateral resistance. The long term trend is still up.
The financials (FAS) continue to lead the market, up 8 days in a row. It recently broke out of its bull flat and continues to move higher.
Biotechs (LABU) I think are going to be the hot sector this year. After breaking the neckline of a reverse head and shoulders pattern it has traded up to lateral resistance at all time highs. In the last 4 days it has closed at the op of its range every time. But we are right at resistance. A break out over the former high and things could really take off.
Gold (GLD) has had a strong move up from its recent lows in December breaking through lateral resistance and then coming back and bouncing off (now) support. It is approaching the highs set back in September last year so we may see some consolidation in here before heading higher. The gold miners (GDX, NUGT, JNUG) are lagging the gold price but they are in a big base and a break out above it could see a very strong move in the gold market.
Oil (USO) has broken out through lateral resistance from its long base pattern. UWT is trading at all time highs. It looks like the market thinks oil is going higher.
ARWR: Stock built a big base and last year moved up off that base. It then formed an orderly decline. Since December it broke out of the down trending channel, spiked up, formed a bull wedge and then the last two days popped to the upside. On Friday it traded up as high as $6.25 closing at $5.72. I will be looking for an entry opportunity in here with $8.50 as the price target.
AVEO: After a big spike last year from $.60 to $4.25 the stock has been consolidating. It is in a tight trading range and trading near the top of that range. If it can break through lateral resistance at $3.25 we could see $4.25 and then $5.50.
COLL: Nice chart. Stock popped out of its wedge formation last Thursday but pulled back on Friday. Not surprising ahead of a 3 day weekend. I would look to go long this stock over $21.38 with $24.00 as the price target. Short ratio, 22.4 days to cover so a big move could squeeze the shorts.
CORT: Stock is trading near its all time high trading up to $21.00 on Friday and closing at $20.65. Over $21.05 and I will look to go long. Price targets $24.00 and $27.00.
GSUM: Artificial intelligence stock that had an explosive move last week. On Friday it had a positive inside day trading as high as $12.20 closing at $11.78. I would look to go long this stock over $12.45 with $14.00 and $16.00 as price targets.
MARK: After being up for 7 days it has had two red days. It probably needs some more consolidation in here. I would love to see it come back to the $11.00 area for an entry opportunity. But should this break over $15.00 then $20.00 is the price target.
TEVA: After its big collapse last year the stock has been in a steady up trending channel. On Thursday it broke through lateral resistance at $20.50 and Friday the momentum continued trading as high as $22.64 and closing at $22.07. I would look to long over $22.64 with $26.00 and $34.00 as price targets.
BITA: Stock got slammed from $55.00 to $27.00 in a matter of a few weeks. Subsequently it has bounced but is now at the top of the down trending channel. I am looking to short under $35.00 or if it should trade back to the $38.00 range. Price targets, $33.00 and then $27.00.
ESL: Stock looks like it is ready to break down in here. After gapping down it is forming a bear wedge and is trading at the apex of the wedge and lateral resistance. I would look to short at $78.00 range or under $75.00.