USA market.

2016-04-14 15:56, Edited at: 2016-04-14 15:59

Dear reader, I want to remind that all I write here is my personal opinion and has only purpose to entertain you and can't be in any way used as advise to buy, sell or keep any kind of assets.

Let's begin with SnP500 weekly picture and I assume that all who use levels and trend lines to analyze assets have something similar with what I have done so far on my chart. I think that there are so many who looks at resistance trend line (RTL) of down trend (A-A' on picture). Thinking, that there are so many watching it I assume that some players have opened shorts already and have being pushed out during last two days. I don't know whether they are right or wrong, but I would say they have interesting down targets: 1950, 1900, 1800 (I consider this level as really strong support), 1750. Reaching last mentioned level implies that down trend broken and who knows where market might stop it downfall. I see a couple possible scenarios.

First major scenario: Index continues rally and reaches 2130 level where it opens question about making new historical highs. This scenario looks attractive for buyers and in case it happens give us really tricky situation to consider. This is probable way to progress for index because days haven't revealed palpable selling yet despite touching zone where last sell-off started (2080 level). Tricky part of the situation is how to put together market weakness since August 2015 and such fast and strong performing rally. I really want to have more signs of strength from buyers to believe in this rally.

Second major scenario: market makes "V" shaped turning point, brings selling and index turns down. This scenario has it grounds because we can't ignore August 2015 and January 2016 selling. Those selling happened after market being stuck in trading range for about a year and we can assume that some players partly unloaded their positions in it. Otherwise what happened there then? However, I think that probability for such scenario not really significant.

Next index to consider is DJI and it looks a bit trickier than SnP500. Look at the picture, it breaks up RTL and gives buyers even more hope of reaching historical highs. Nevertheless, there is obvious correlation with SnP500 and can be considered accordingly. I don't go throw levels, just look at the picture and ask me if something still puzzles you.

The index to puzzle head over is NASDAQ. There is more weakness than other considered indexes show so far and it makes the whole situation even more interesting. To begin thinking how to make sense of the situation I need to understand what is the structure NASDAQ. Considerable number of underlying stocks are companies where I personally think concentrates “hot money”. “Hot money” intent to speculate on fast growing companies. They bear more risks than "usual" investors and I personally think that they are more cautious when it’s time to jump off markets which coming to territory of uncertainty. Sure thing that they are the first one to enter market when new opportunity arises (new up-trend coming for example). This time I refer you to the NASADAQ picture to think what levels might be considered and what scenarios are possible.

Meantime, I want to look how some industries perform and concentrate a bit on a couple of them.

I know by my own experience that whether you make a short or long term trade its success depends on your ability to choose right asset at the right market phase. It's possible to make a right guess toward what direction market tend to move looking at major indexes but significantly harder to choose right stock to use.

I want to show you some maps and graphs created using Qlikview. They can give us more sense about industries and stocks performance. Red color refers to negative performance and gradually turns to green referring to positive performance on maps. Rectangles reflect percentage of performance. I accent that there are only some industries and some of their underlying stocks are used.

My first map shows several industries and their performance since current rally start (January 29th 2016).

I like this picture, it simple and reveals best and worst performers. However it says nothing about long term trends and this time I want you to look at linear charts starting at the beginning of 2015.

Looks like a mess, right? No worries, it's easy to split industries and look at them separately. I want to start with "Gold mining" as one of the rally best performer.

Now we can see what is going on from different perspective. I think gold mining industry definitely interesting and need more close analyze and attention.

Next industry to take a look is Biotechnology

Here we have different picture. Despite a lot of green color bigger picture shows weakness in long term trends.

I don't dig dipper into presented graphs and maps today, look at them and hopefully you can find something interesting there.

Best regards.

Pavel.