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MV Weather Report: Buyers to Hibernate for the Summer?


Rain or shine, we review the day's biggest stock stories.

Bears and some bulls -- the rational ones -- finally got what they were looking for this week. The market finally pulled back after 9 weeks of advancing. There wasn't any news that particularly took the market down; buyers were just exhausted.

There were some stocks in the green today: Google (GOOG), Goldman Sachs (GS), Research in Motion (RIMM) and Microsoft (MSFT) stood out to me. On the downside, it was an across-the-board sell-off. One name that stood out to me was Potash (POT). The stock gapped higher on the open, reversed, and ended up closing lower for the day.

Now that the pullback is here, what happens now? Thankfully, Professor Jeff Cooper buzzed today about the S&P.

"The Weekly Swing Chart has turned down once since the March low, on the week ending 4/24.

"Of course, that week tailed up meaning the S&P closed near the high of the weekly range.

"That won't happen this week.

"One of the reasons why it was clear that the pullback was not a buy (other than for a scalp and that yesterday was a back test of the 900 level) was that the weekly chart had not turned down.

"It would do so on trade today below 879.20

"That's 3 points below the pivot du month of 882. Wouldn't it be interesting if the S&P undercut 882 and did an expiration snapper in the last hour?

"Just askin'."

The S&P did trade below 879.20, turning the weekly swing chart down. However, the close was better at 882 - which is the level we've been talking about all week.

What happens next? Some analysts have said the pull back can last for 2 to 3 weeks. I think that's fair after the run we've had.

If you're bullish, you could still search for long opportunities. Professor Smita Sadana shared her reasons for purchasing Dryships (DRYS) today:

"After many days of dry action after announcing a secondary offering, Dryships is on the move today. It had lost 40% in the past 6 days after tripling since March. Talk about volatility!
"Notice how it's bouncing from significant support at the 50-dma. Whether the volume patterns are conducive enough to carry it to the 10 and 20-dma resistance, remains to be seen but today's volume is already over 80% of average daily volume, and it is trading at $7.2.

"It's as volatile as they get, so I have taken a much smaller than my usual-long-position in it."

Click to enlarge

Have a great weekend! See you Monday.
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No positions in stocks mentioned.

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