Monday, April 27, 2015
April/May Safe Haven Play - Sell In May and Go Away
Each year traders try to navigate their way through the financial market and turn a profit. But this is difficult.
The
stock market provides market participants with several opportunities
each. With all the holidays and climate changes the market as a whole
along with specific sectors typically have seasonal rallies
and sell off in price.
As May approaches many of us are starting to figure out how to play the “Sell in May and Go Away” potential move.
I
cannot help think stocks will start to struggle as indexes test new
highs and key resistance levels. The good news is that when money is
flowing out of one investment it typically flows into another which
provides us with an opportunity to make
money.
Risk
capital has been flowing into stocks recently but with the stock market
over bought on a short term basis traders will start to protect their
capital and move to specific sectors within
the market to protect their capital.
Utilities
have been underperforming all year and are not being talked about by
anyone. This is a contrarian signal that it will likely become the
sector of choice as fear creeps
into the minds of market participants.
The
chart below shows price of this sector is trading at the key 200 day
moving average which should provide support. Also the bullish chart
pattern is pointing
to higher prices.
It Is The Season For Utilities!
The chart below clearly shows where price is trading today and
what is likely to happen over the next 2-3 weeks as we enter May.
It Is That Time Again – Conclusion:
In
short, US equities continue to be in a long term bull market. It is
best to remain net long stocks as the odds of a trend continuing is more
likely than not.
So I feel a great way to get involved in the market here is to get long the utility sector through the exchange traded fund XLU.
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My New Target for the Nasdaq The bullish "W" formation on the chart provides a fairly reliable target of 5,200
Several previous attempts at a new high in the Nasdaq failed. The latest run at a record was in March, when the index closed over 5,000, but then pulled back on profit-taking and fear of lower-than-expected Q1 earnings. (more)
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Cynosure (NASDAQ: CYNO) Chart Says This Medical Equipment Stock is Poised for a Big Rally
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Since many of the stocks in this group have already made big runs, I am on the lookout for fresh chart pattern breakouts.
Aesthetic and medical device maker Cynosure (NASDAQ: CYNO) fits that bill. The company makes devices to treat various skin and vascular conditions, including tattoo removal and cellulite treatments.
On the charts, Cynosure has been trading in a very wide long-term trading range between $21 and $31.50, in round numbers. (more)
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US Weekly Economic Calendar
| time (et) | report | period | ACTUAL | CONSENSUS forecast |
previous |
|---|---|---|---|---|---|
| MONDAY, APRIL 27 | |||||
| TUESDAY, APRIL 28 | |||||
| 9 am | Case-Shiller home prices | Feb. | -- | 4.5% y-o-y | |
| 10 am | Consumer confidence | April | 102.4 | 101.3 | |
| WEDNESDAY, APRIL 29 | |||||
| 8:30 am | Gross domestic product | 1Q | 1.2% | 2.2% | |
| 10 am | Pending home sales | March | -1.3% | 3.1% | |
| 2 pm | FOMC announcement | ||||
| THURSDAY, APRIL 30 | |||||
| 8:30 am | Weekly jobless claims | April 25 | N/A | N/A | |
| 8:30 am | Employment cost index | 1Q | 0.7% | 0.6% | |
| 8:30 am | Personal income | March | 0.3% | 0.4% | |
| 8:30 am | Consumer spending | March | 0.5% | 0.1% | |
| 8:30 am | Core inflation | March | N/A | 0.1% | |
| 9:45 am | Chicago PMI | April | -- | 46.3 | |
| FRIDAY, MAY 1 | |||||
| 9;45 am | Markit PMI | April | -- | 55.7 | |
| 10 am | ISM | April | 51.9% | 51.5% | |
| 10 am | Construction spending | March | 0.5% | -0.1% | |
| 10 am | Consumer sentiment | April | N/A | 95.9 | |
| TBA | Motor vehicle sales | April | 17.1 mln | 17.2 mln | |
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