This week most assets entered into a consolidation after previous movement up or down. This type of digestion makes sence as investors and traders need time to absorb previous price actions. This time we are going to discuss different assets: from where they came from and where they heading.
European indexes ended the week lower first time for the last two months — something to take notice. French index CAC40 was the worst performer, broke its accelerated trend line and closed below 8 EMA. It will be healthy to see some type of consolidation after the big move up with a potential intermidiate target at 4,264 where 50 EMA is situated. But first it should break down 21 EMA. If buyers want to continue price they will defence the break out point of 4,500.
S&P500 were doing a bit better and closed with a tiny red candle, but still there is nothing to worry about for long-term investors as it is hovering around record highs.
The best strategy will be buying strong stocks on pullbacks and in case of potential pullback in broad indexes it is worth trying to trade underperforming stocks with Put option. This stock specifique approach will definitely pay you. Here are some strong stocks I will be watching next week for buying opportunities:
Facebook after it found support at $55 and broke up consolidation resistance caught up some upside momentum and continued a great action. 8 EMA at $64 acts as a support. First buying opportunity could be on re-test of previous resistance at $66.
Microsoft is trending since November 2013. We can distinguish different timeframes there: macro for long-term ivestors and intermidiates for more active traders. With last reversal candle from $42.00 which could be our new pivot point it closed in the red inside candle. Means that balance haven't changed much and it needs more time. Potential buying zone is close to $40.35-$41.00.
Intel is one of the strongest stocks in the market after it broke up bull flag (orange zone). After buyers took off the previous high it attracted much more buying. This move was accelerated when Intel released its upside gidance — now they expect higher slaes by the end of the year — definitely something positive for investors. Company struggled earlier because of lack of demand in Personal Computer industry. But they changed their strategy and now produce micro chips for tablets as well. Company pays high dividends and looks attractive for investors combined with strong markets. It may digest a bit after 6 positive weeks in a row. Pullback is healthy but no more than 1/4 — 1/3 of this big move if buyers want to be in control.
Some weak stocks on the market:
IBM struggles after frustrating earnings release and is heading lower to major support at $172 for the third week in a nice channel.
Apple is showing some relative weakness after big run caused by a releas of its earnings report. But it feels a bit extended from 8/21 EMA and further pullback/consolidation will be healthy to see for both buyers and sellers. First target is $88.00 where 8 EMA is situated, then potentially it could be our buyable area.
Stocks from Industrial Sector feel badly because of tension in Iraq. General Electric is good candidat that represents the whole industry. From fundamental point of view there is tension in Iraq — one of the biggest supplier of Oil in the world. Break in supplies leads to higher prices and then higher costs for companies that use this type of resource in its operational production. Intermidiate trendline was broken as well as 8/21 moving averages. So, we expect to see further preassure on price from sellers side.