30,000-Foot View of the S&P 500 and a Review of IBM, Intel Ahead of Earnings

By ChartLabPro.com  OCT 12, 2012 4:45 PM

Plus, Apple is in a holding pattern for now.


MINYANVILLE ORIGINAL We wanted to finish out the week with our 30,000-foot overview of the S&P 500 (INDEXSP:.INX).  Currently, we have a Strong Buy (or 5 rating) on the S&P 500.  For newer readers, our proprietary algorithm that we use for the S&P 500 and individual stocks has been used for the last 13 years to run institutional money.

In a recent commentary we shared this thought:

Based on our parameters, there are clearly two points on a near term trading basis which are critical to determining the market's next directional move: key resistance at 1459.00 and key support at 1421.50. For those investors / traders who are currently long, I would remain within that posture on an intermediate to longer term basis if price action remains above 1421.50. A close above 1459.00 would warrant adding to a long position.

Based on Thursday's settlement above 1459.00, traders should have added to longs. The caveat is to keep a fairly close stop on the added contracts. Basically, keep a stop at 1446.00 (daily US pit close only).

Sector Review

Health care remains the strongest sector and is rated a 5, or Strong Buy.

Below are the strongest names in the S&P 500 as of October 12, 2012. The list was dominated by the financials – both regional banks and insurers. For our latest call on the banks, see Think Twice Before Jumping Into JPMorgan, Wells Fargo, and Other Bank Stocks.

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Most Overbought and Oversold Within the S&P 500

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Google (NASDAQ:GOOG) is still a Strong Buy and up 18% since we moved to a Strong Buy, however we reduced 100% of this name at $760 because of the Overbought level.  We are waiting for a neutral countertrend indicator rating as long as it remains a Strong Buy.

Apple (NASDAQ:AAPL): After getting a Sell signal on the countertrend indicator we reduced exposure at $682. On October 8 we downgraded the stock to a Buy from a Strong Buy.  We are in a holding pattern until we get our next Buy or Sell signal.

Intel (NASDAQ:INTC) was hit with a downgrade by Bernstein (which seems a little late). Bernstein cited pricing pressure in the PC space.

Next week we have two tech earnings reports: IBM (NYSE:IBM) and Intel. IBM is on tap for earnings next Tuesday. The stock has shown fantastic price action and we currently have a Strong Buy on it.  We don’t recommended getting long into earrings, however. If you are a long term investor, stay the course.

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No positions in stocks mentioned.

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