Fallondpicks.com: Weekend commentary

Tech averages were the key winners from Friday's buying. The NASDAQ and NASDAQ 100 closed on bullish piercing patterns helped by sizable gains in the semiconductor index. The latter index was able to retrace the last three days of losses, although a retest of 474 looks favored before further gains can develop, Overhead resistance at the 200-day MA will likely fuel supply selling on Monday in this index. Volatility had a very strong week and the lackluster action in the 14-22 range from late 2004 looks set to end. An increase in volatility is typically associated with fear (selling), but buying opportunities will present themselves even if this price retreat develops into a more formal downtrend.

Large caps [Dow/S&P] were a mixed bag; the Dow churned on heavy volume, but the S&P was able to close with a positive test of the 200-day MA. The Dow darling of CNBC looks to have lost much of its gloss as buyers failed to bid up this index in line with the tech averages and S&P. Finally, the Russell 2000, which remains the laggard index of the group, was able to close on a bullish hammer. Given the proximity of the 200-day MA it is likely many will wait for a test of this important average before buying, so demand should pick up as bulls put an early stamp on small cap proceedings.

Given the relative position of market indices, upside bounce targets of the 200-day MA and/or 20-day MA are best bets. Expect short sellers to jump on the market at these averages. The 50-day MA is likely to be above the 20-day MA and may not be as strong a resistance area as the faster moving (20-day) average.

Newsletter update:

KNSY hit it's raised stop of $29.87. The March 16th Subscriber play closed for a 14% gain and the April 25th Breakout play for a 1% gain. LTM was a Breakout play from March 17th. Friday morning selling forced the play out for a 7% loss. SHO suffered a large reversal from an earlier breakout. The May 4th play closed for an 8% loss. The December 6th Subscriber pick was able to finish with a 7% gain. WTI hit its stop from March 31th after building solid gains. The Breakout play closed for a 10% loss while the January 24th Subscriber play was able to post a 15% gain. CHRK was a Subscriber pick for Friday but unfortunately hit its stop price over the course of the day's trading (although finished on another bullish candlestick to remain an attractive 'buy'). It registers as a 4% loss. EGY was another energy play to bite the dust. The April 7th Subscriber pick closed for a 10% loss.

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