Stock Market Indices Review for Week 15 in 2015

Apr 10, 2015 -


Stock Market Highlights - Week 15

- GE to sell bulk of finance unit and return up to $90B to investors.
- WTI and Brent Crude Oil closed on Friday at $51.64 and $57.87 per barrel, respectively.
- Spotify valued at 8.4B and is looking to raise $400M.
- Etsy to sell 16.7M shares between $14-$16 in IPO later this month.
- U.S. dollar finishes 2.6% higher against the euro Friday. 
The Dow Jones Industrial Average closed at 18057.65 on Friday, April 10th 2015. The last three months of activity has created a descending triangle trading pattern. Typically these will fail and then we would be looking at a target of 17000 for another retest of that support. However, Friday's activity on strong volume suggests a breakout to the upside out of the descending triangle pattern. The stochastic indicators at the bottom of the chart suggests that we are at overbought territory. Therefore, a pullback is likely though not certain. If the market continue to rally, we would like to see it first break through the 18200 level. There is still not enough positive action to suggest the market will be able to break out of its current trading range of around 18200 to 17000.


The S&P 500 closed at 2102.06 on Friday, April 10th, 2015. While this is still a ways from its high in early March of approximately 2115, it is well on its way of retesting that level. Different from the Dow Jones Average, the S&P formed a symmetric triangle in which it appears to be breaking to the upside. Volume in the past two months has been relatively flat, which does not help us in determining the strength of this potential break out. We are still trading above both the 50 and 20 day moving averages. As long as we continue to trade above both the red and blue lines we can expect higher prices to continue. Still if we break below 2050, the chart will be susceptible to further technical damage.


The Nasdaq closed at 4995.98 on Friday, April 10th 2015. Typically, all three indices, Nasdaq, S&P, and the DJIA trade similarly. However, this is the first time in a while that I've seen different chart patterns in the same period for the three indices. The Nasdaq is fighting a trading range between the below two blue lines. Price action has successfully retested the 50 DMA three times in the last two months. This is a positive sign for bulls. However like the S&P and DJIA, the stochastic indicators suggest we are in overbought territory. Therefore, either sideways action or a pullback might be in store. Evidently sideways action would be beneficial for the bulls. Though a pullback would not be a determinate either. If we see the price action below 4800, we should start to question if the bulls are still in control.


Wells Fargo, a Berkshire Hathaway holding, closed at 54.32 on Friday, April 10th 2015. In recently years, the financial industry has usually been a leading indicator as to where the stock market is headed. This weak action from the strongest U.S. bank is not a good sign for the markets in the interim. We would like to see the price action for the stock to be above both the 50 DMA and 20 DMA. Though if it falls near the $50 per share level, you'll be sure to find buyers. This sideways action mimics that of the indices and I would not be surprised to see this continue.


 
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