Tuesday, July 15, 2014

Technician John Kosar: The Odds Favor a Correction in the Third Quarter

by James J Puplava CFP
Financial Sense

Jim welcomes back John Kosar CMT, Director of Research at Asbury Research LLC. John sees the odds favoring a correction in the third quarter and advises to have a plan in place to take advantage of any corrections. John also notes that the market will be more vulnerable to mishaps after the Fed taper ends later this year. John gives two technically significant numbers for the Dow; 16600 on the downside, and 17500 on the upside. Everything starts with interest rates John points out, so keep an eye on their direction. Also this week, Ryan Puplava has the Market Wrap-up, Erik Townsend covers commodities, and Tom Smith discusses a slippage in investor sentiment, and has some takeaways on the Fed minutes released this week.
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This Could Be Signaling The “Beginning Of The End” For The Bull Market In Stocks

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Individuals Pile Into Stocks as Pros Say Bull Is Spent
Main Street and Wall Street are moving in opposite directions.
Individual investors are plowing money back into the U.S. stock market just as professional strategists say gains for this year are over. About $100 billion has been added to equity mutual funds and exchange-traded funds in the past year, 10 times more than the previous 12 months, according to data compiled by Bloomberg and the Investment Company Institute.
The growing optimism contrasts with forecasters from UBS AG to HSBC Holdings Plc, who say the stock market will be stagnant with valuations at a four-year high. While the strategists have a mixed record of being right, history shows the bull market has already lasted longer than average and individuals tend to pile in at the end of the rally.

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A Breakout and Key Levels in Amazon AMZN

Amazon.com is showing signs of life this morning with a range breakout into a key resistance area.
Let’s update our Amazon (AMZN) chart planning levels and note what event could trigger a breakout trade.

I like to keep the charts simple, so let’s focus our attention on the highlighted box (between the $322 and $338 levels) and note today’s breakout above the upper resistance and $340 level. (more)
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Northrop Grumman Corporation (NYSE: NOC)

Northrop Grumman Corporation provides systems, products, and solutions in aerospace, electronics, information systems, and technical service areas to government and commercial customers worldwide. The company’s Aerospace Systems segment designs, develops, integrates, and produces manned aircraft, unmanned systems, spacecraft, high-energy laser systems, microelectronics, and other systems and subsystems. Its Electronic Systems segment offers solutions for sensing, understanding, anticipating, and controlling operating environment to military, civil, and commercial customers. The company’s Information Systems segment offers advanced solutions for Department of Defense, national intelligence, federal civilian and state agencies, and commercial and international customers. Its Technical Services segment provides logistics, modernization, and sustainment support.
To review Northrop’s stock, please take a look at the 1-year chart of NOC (Northrop Grumman Corporation) below with my added notations:
1-year chart of NOC (Northrop Grumman Corporation)
NOC has formed a solid resistance at $125 (blue), which would also be a 52-week high breakout if the stock could manage to close above it. In addition, the stock has been climbing a trendline of support (green). These two levels combined have NOC coiled within a common chart pattern known as an ascending triangle. At some point, the stock will eventually have to break one of those two levels.

The Tale of the Tape: NOC has an up trending support and a 52-week resistance level to watch. A long trade could be made on a close above the $125 resistance. A break below the up trending support could be an opportunity to enter a short trade.
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Juniper Networks (NYSE: JNPR) Is About To Rally

If there is anything I like to see in a stock it is resilience. For the past four months, Juniper Networks (NYSE: JNPR) lagged the market, but it just refused to drop below the $24 level. This maker of network infrastructure was rocked by a negative analyst opinion in May and a downgrade in June, but support held firm.
And while JNPR has gone nowhere since April, money continued to flow in. The on-balance volume indicator, which measures volume traded on up days versus down days, began to rise in early April.
Theoretically, if the bulls are more aggressive, more shares change hands on rally days than on declining days. That tells us there is demand for the stock, even if the trend is flat. Sooner or later, there will not be enough supply to offset it, and prices are very likely to rise. (more)

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