From its peak in September- October at around 2920, the SPX dropped all the way to 2350 in December. The current rally from this level suggest that a 38% Fibonacci retracement would bring the Index to around 2570. We are almost there. That level is also a strong resistance. The 2570-80 level acted as a support in February, April and May of 2018.
It suggests that...
The S&P 500 is likely to re-test the 2800 level after having broken 2700 last week. At this point momentum players should probably follow that trend and go long USDJPY.
The Energy sector is a BUY.
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WFC's stock price made a double bottom around $50-51. Retracement to $56 is highly probable (38% Fibonacci level from 66 to 51). The stock is down almost 20% in the past three months.1Q results were not that bad as it reported earnings of $1.12 per share beating estimates of $1.07.
With a forward P/E of 12-13x and a current P/BV of 1.4x, the stock appears cheap....
Energy stocks in the US rose sharply on Tuesday April 10. XLE went up about 3% with some major stocks like Exxon, Halliburton, Occidental Petroleum or Devon rising substantially.
Looks to us that Energy stocks are ready for a breakout, after years of underperforming the overall market.
Weekly S&P 500:
- 800 low in 2009 and 2003 held. Double bottom.
- Breakout above major resistance of 1600 in June 2014 suggested a rally of 800 points (1600-800).
- We are now there at 2400 (1600+800).
We think it is going to be difficult to go higher before some major consolidation.
Between March and April USDJPY went from close to 115 to 108.55. It looks like this will be tested again (108.55). This will not go well with the BoJ and Abe's government. But Trump would like it!
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Reliance Communications: down 50% since April. P/BV at around 0.2x. Even though the telecom market in India is extremely competitive, we do not think Reliance will default on its debt or go bankrupt. Maybe a deep value buy.
The Energy sector has been "hated" by investors for a while. However there maybe an opportunity for that sector to outperform the S&P500. XLE, the Energy ETF, is down by 13% since mid December 2016 and back to its lows of 2016.
2380 held many times over the past few weeks. A new test is likely. Then what?
Break below 2380 could bring it to 2358-59: a daily upside gap that needs to be closed; or
a re-test of 2400.
Facebook is up around 8-9% since mid-April. It gapped up April 28th. That day the candlestick showed that the stock could not hold its gains. Today (May 1st) is critical.
FB is up 30% since the beginning of 2017! It trades at a P/E of around 40 and P/ Sales of 15. Maybe it's all priced in.
