MARKET ANALYSIS           

A persistent bear is giving more than a little something back Wednesday as bulls look to score a market-based follow-through day. On the week, the SP-500 (SPY) is up 1.30% and presenting growth investors with more food and tickers for thought.

Key highlights for bulls buying in a few traders’ idea of bear territory:          

• Continued bevy of M&A (MMM, PAR, GENZ, INTC, HPQ) reports Monday.
• Economic data Monday and Tuesday including Inc & Spend, Case-Shiller, consumer confidence and Chicago PMI.
• Bullish September Morning on fresh monthly inflows, in-line but relief felt expanding China PMI data, Oz’ GDP and stateside ISM expansion beat.

Key highlights for “selling a little sumthin” in bull or bear territory:   

• Reaction Tuesday to Eurozone unemployment of 10%, CPI growth of 1.6% and less-than-jolly UK consumer confidence of -18.
• Intraday blip of anxiety following FOMC Minutes which largely confirms Bernanke’s weaker immediate outlook from Wyoming symposium last week.
• ADP private payrolls register surprise drop of -10,000 vs. 13,000 estimates.

Market Snapshot


Figure 1: ProShares Ultra SP-500 (SSO) Weekly

Call it what you want—fresh monies pouring in, optimistic cheer for in-line but relief felt overseas data or simply a willingness to climb a wall of worry in front of Friday’s always ballyhooed and closely-watched nonfarm payrolls report. No matter, bulls have taken action in a substantial sort of way Wednesday and that’s to be respected.

Despite historical seasonal tendencies which point at negative returns in the market during the September / October period, bulls look on pace to score a classic follow-through day in a very timely Day 4 signal, since establishing a rally attempt low last Friday.

Further, with leading growth stocks already having shown some solid technical moxy during an otherwise nasty August for the broader averages, the likes of the SP-500 appears to have the ammo to secure a retest of weekly chart right shoulder highs still some 3% to 5% above.

Finally, with the VIX off just -5.85% at 24.55% and still a handful of percentage points from signaling its own quantitative oversold short-term reading, the expectation is any potential “Profit-taking!” headlines in the next day or two, could and should prove very brief until bullish complacency and loftier extremes are reached.

MARKET LAB
Bullish Technicals

• PS Elliott sees W4 completion and EBOT buy signal weekly in SSO. 
• Day 4 FTD on Wednesday signals “confirmed uptrend” low for majors. 
• Leading growth stocks grow 0.6% during August based on IBD100 versus declines of 4.5% - 6% in SP-500 and Naz’.
• “VIX Stretch” neutral readings intraday Wednesday.

Bearish Technicals

• 1930 Bear Market Rally repeat states EW Intl.
• Worst Six Months calendar period.
• Fourteen-month old Bull Run and 10-Yr. anniversary mark of ATH top in broader market.
• “Sell in May and Go Away.”
• Death Cross Major averages.
• Weekly right shoulder SP-500 still intact.
• Seasonally weak September / October looming.

RADAR WATCH

Unsurprisingly, after what’s been optimistically stated in the commentary above and in appreciating last week’s observation on taking timely profits from bearish gains of 3.25% in the SP-500, Mr. Market (SPY) is nearly and altogether removed from the Bears Radar. In anticipation of a slight 1% to 1.5% pullback and still intact 50SMA resistance, partially and still profitable bears are still estimated to be in a position to draw a technical line in-the-sand at slightly higher levels of 109.

In lieu of slightly stretched market prices and three growth plays already on the Bulls Radar, there’s little to add as far as fresh watchlist candidates are concerned. None of the three tech-based companies have extended themselves to the upside and in fact remain near support lows and / or in consolidations which could be of interest to bulls now that the market has signaled a FTD.

RADAR SCREEN
The following optionable stocks look to have a combination of technicals and fundamentals that might warrant further investigation based on a trader’s own methodology and risk acceptance. The list is not a recommendation and is intended for educational purposes only.

The Bulls

Table 1: Bull Watch list

Non-Directional

Table 2: Basing Watch list

The Bears

Table 3: Bear Watch list
 

Chris Tyler
Senior Staff Writer & Options Strategist
Optionetics.com ~ Your Options Education Site
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The information offered here is based upon Christopher Tyler’s observations and strictly intended for educational purposes only, the use of which is the responsibility of the individual.