The S&P 500 is down for a second consecutive week by 0.4% still up in 2016 by 0.7%. The NASDAQ is down for 2016 by 5.4%! We are at the end of the quarterly reports season showing, as expected, an average decline of 7.1% in profits. Some sectors are up: Healthcare is up by 7% and Telecom by 16%. The big surprise came in on Friday, with the April employment report showing a lower than expected growth of 160,000 jobs, instead of the anticipated 207,000. How did the market take it? Moved up, expecting the bad data to delay the planned June interest rate hike. What about the coming week? I expect the market to continue the decline this week too. Right now the trend is down.
Let's take the technical view of the market. When we take a look at the S&P 500 daily, we can see a clear bounce from the resistance and while taking a look at the 2000 area I believe it is going to retest the area quite soon.
Let's take a look at the last week pics. Our first pick last week was Weight Watchers International (WTW ) short below 12,60 USD, which did get to the 3% area so we did get a three quarters' partial at 3%. However, if you take a look at the daily, you can see a very strange daily pattern. Let's take a look at the intraday and understand something very important here. You can see a huge gap up. This is after we took a partial profit and then the nice cushion and my last quarter size hits me, hits me very hard. However the reason why I took my three quarters' partial is exactly because of this. I need to put some money in the pocket in order to handle correctly the last quarter size. Now I am out, even though it continued moving lower and I know it is going to continue lower but again you have to have a nice cushion before you manage the last quarter size. So selling in this case was very important. WTW ended in a loss due to the fact that it gapped up. My second pick for last week was Costco Wholesale Corporation (COST ) below 147,1 USD. It is moving in the right direction, but did not reach yet our 3% target.
Let's take a look at this week picks. My first week for this week is American Tower Corporation (AMT ) long over 106,75 USD, you may wonder why to take a long while we expect the market to move down, but the reason is that AMT is in the telecom business, providing communications towers for the cellular industry. Now as you maybe remember I mentioned earlier that this industry specifically moved up by 16% for the last quarter, so AMT long, nice technical formation and a good sector. My second pick for the week is Danaher (DHR ), same story applies, this is a healthcare company, again sector that moved up by 7% for the last quarter, so DHR long looks like a perfect formation and I going to take it long over 97,58 USD.