Perusing The Markets Part 1...

Markets continued to grind higher last week, and as my post "Babbling on Markets Direction" showed their was a high probability of the up move coming after OPEX.  We finished the week with a close above 1500 on the S&P, and once again the QQQ lagged behind with help from AAPL getting trimmed some 60 points.  The market could use some rest to consolidate a bit and work off a bit of an over bought RSI, but this market is showing no signs of slowing down, and while a pull back would be nice to allow for new set-ups that almost seems like it would be too easy.  Sector rotation has been a major theme in keeping this run going and I am going to take a look at the strength in different sectors trying to find the next trade.  Options flow continues to remain extremely bullish not just in near term strikes but moving out to Jan 2014 so major money seems to believe this is going to be a rally for the entire year.

First up is a 20 day chart of SPY, and I post this to show how the shallowest dips are being aggressively bought.  It is important to notice this because a lot of the times we can see algos sell of the SPY's .50 and feel like it is time to get short only to see the market rip back.  There is a lot of fund flows and institutions are buying in afternoons.  In my opinion this market is going higher and much higher at that through out this year.

Second chart is showing SPY over a 1 year period and there is nothing in this chart not to like.  Sure, RSI is a bit extended and at these levels has seen some selling, but we can always hold here for longer periods of time.  Any dips are going to be bought could we pull back to the 10 or 20 days, sure and at the point it would be time to get long with both hands I believe.  

As for the QQQ, well, AAPL has held it back, but despite that their has been some real strength in individual names such as AMZN, GOOG & PCLN.  Despite AAPL's large weighting it has been able to hold its gap and build a nice consolidation bull flag, it could be possible that this breaks out higher and keeps this market moving higher.  Similar patterns were seen last summer followed by capitulation sell off hammers to a nice pop and then some choppy consolidation then pop higher bull flag and go.  Potential for a similar set up here.  We shall see.

Sector rotation continues to be a main theme in this ever extending rally, which makes it important to seek out the strength within the market each day/week.  This chart shows all the different sectors since August.

IWM a bit extended here much like the SPY, but again any dip is being bought aggressively so some consolidation or small pull back could happen and then its time to go higher.  Or it remains extended and just continues to run.  This market is strong.  IWM is certainly my least favorite as it seems to be the most extended and most in need of a rest or small pull back.  Below is seven charts from this sector.

ATHN Could use a rest to build a flag and then break out and set its sights on highs.

 AYI Broke out late last week and is one that looks to have more room to run as it looks to make a run through 71.45.

 CVLT looks strong here and is one to watch as it is beginning to break out.

 LPX has worked off some over bought and is now flagging in preparation for its next leg higher.

 OAS could use a rest to consolidate its latest move.

 PCYC  a bit extended to reach resistance but poked its head through on Friday.

 ROSE stopped at resistance and could use some time to flag here and rest before making its next move.

XLY consumer discretionary names also extended like many and breaking above their longer term up trends.

Broke out of a 5 month range and RSI looks ready for a larger move.

 CMCSA flagging and looking to break out to new highs.

 MCD nice rebound from initial earnings reaction and is now looking to run to new 52 week highs.  94.16, 96.50, 98 next spots.

 NKE perfect move on Friday.

 Upgrade on Friday really sent shares soaring, maybe a bit of retrace before making another run to the 770's.

 Needs to show some strength here and get through Friday's highs, before I would get interested.

 TGT trying to build some momentum and break this 6 month down trend.  I Think this one can be a big mover in the weeks to come.

 XLP had a nice run last week breaking out from resistance and is just a bit over extended but can run some more.

Really like this set up here been watching it all last week, I hope to get involved through 103.50ish.

 MO looks good here and looking to clear out about 8 months of resistance... Not much of a mover.

 PM also looking to break out, smoking must be back.

 WAG looks pretty good here riding the 10 day, could take some time.

XLE looks to be the place where money is coming into as I have seen many names seeing bullish positioning in Options, and the chart is just beginning to reach 52 week highs and ready to break out above them.

APC if youve read the blog you know I have been mentioning a lot of bullish positioning in this name and it is starting to break out with a lot of room to run.

 CAM nice little cup and handle break out and consolidated and looks ready to run.

 Nice uptrend and looking to break out past of this trend resistance.

 CVX flagging and looking to take out year long highs.

 EOG has rested and looks good here if it can break through the 127.34 level has a lot of room to run, but a big volume pocket sitting there.

 MPC another name I have been highlighting with bullish options flow.  This is a bit of an older chart I accidentally added.

 NBL on some run and now consolidating for its next move higher.

 OXY has been on a nice run and is not the strongest in the sector but one to keep an eye on it it can catch up to the others.

 XOM another one that is looking good here would like some consolidation before making a run through the 93 level.

Part #2 tomorrow.