BullBear Trading: Stock and Financial Market Technical Analysis

Profit Analysis: This Is What Will Happen Next Week

The markets took a wild ride last week. The S&P 500 surged early in the week on hopes of a business friendly, Romney victory only to get dashed when President Obama won his second term. The SPDR S&P 500 ETF Trust (NYSEARCA:SPY) lost $3.40 on the week to close at $138.16. The key this week is to realize it is options expiration. This is where institutions will push the market in the opposite direction from the crowds. After the drop last week, many more puts exist than calls. This tells us the majority of investors are favoring the downside. For institutions to profit, they will need to push the market higher by Friday. If you take this data and insert it into the charts, there is a major support line discussed in the video at $136.70 on the SPDR S&P 500 ETF Trust. Based on these two factors, it appears longs should be initiated if the market drops to that level early in the week for a late week rally. (Watch the analysis video below)

There are many stocks that look intriguing soon. These are stocks that are nearing major support levels and could be setting up for a bounce in conjunction with the market into options expiration Friday. I will lay them out below.

Exxon Mobil Corporation (NYSE:XOM) closed at $87.21. The stock has fallen sharply in the last week and is just above the 200 day moving average. This major support level is at $86.40.

Google Inc (NASDAQ:GOOG) has also taken a major beating in the last month, following earnings that greatly disappointed Wall Street. The stock has collapsed from a high of $774.38 on October 5th, 2012 to a closing level of $663.03 on Friday. The 200 day moving average is just slightly lower at $636.00. This will be a big support level for the stock and a likely bounce will occur.

Cummins Inc. (NYSE:CMI) has been one of the stronger plays lately, though still fell last week when the markets collapsed. There is a major support coming into play when the 20 day moving average inches up to meet the 50 day moving average. Should price fall into this level during the week, look for a great buying opportunity for a swing trade. This level is at $94.90.


Gareth Soloway
Chief Market Strategist

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