Key Levels for Stock Market Into Year-End

After two strong days to start the week, the markets took a step back on lighter volume yesterday. Many stocks have been enjoying a very nice run since the November 16 lows, so some digestion/corrective activity makes sense. There is still no deal on the fiscal cliff and many traders have already started to pack up shop as 2012 is coming to a close.

Today the S&P futures are basically flat. As long as we stay above 1426-1432, I think the recent stair-step approach to higher prices will remain intact going into the end of the year. I will come out with my 2013 predictions next week. Review my predictions for 2012. Entries and exits do matter in order to stay in some type of “portfolio approach” and manage multiple positions.

Banks took the day off and could use some time to consolidate.

The Financial Sector ETF (NYSE:XLF) needs to build a new floor above $16.20-16.40 to give a platform to launch from in 2013.

Goldman Sachs (NYSE:GS) just went from $120 to $129ish in only a few sessions, so that stock needs some rest too. Holding above $124.50-126 should keep momentum there.

Bank of America (NYSE:BAC) had a micro reversal yesterday after a tremendous move. I would think $10.80-11.10 could be a buyable spot if this wants to pull-in or consolidate further.

Homebuilders have been a bright spot all year and continue to lead. At some point I believe the Homebuilders ETF (NYSE:XHB) should bust and hold above $27. The sector just had a nice two day move—Ryland (NYSE:RYL), Hovnanian (NYSE:HOV) and Lennar (NYSE:LEN) have been some of the best movers there. Back on January 10, Jim Cramer shared my analysis on the homebuilders on his CNBC Mad Money program: Homebuilder Strength Could Mean Big Market Upside in 2012.

Tech has been pretty mixed. Amazon (NYSE:AMZN) has been best-in-breed, breaking above $255 a few days back after a nice move from the November 16 lows. With a little rest near historic highs, I believe it can get another strong push. The next pivot to watch is $264.30.

Google (NASDAQ:GOOG) is not very explosive but continues to work higher after breaking its mini downtrend on 11/28 around $675. Some consolidation above $710 would make some sense as this chart continues to repair.

Apple (NASDAQ:AAPL) had two strong days earlier this week starting with a nice Red Dog Reversal. The stock now has to stay above $525ish, in my opinion, in order to create another action area trade through $534-535 for additional gains.

Salesforce.com (NYSE:CRM) could use a rest after nice move from $160, which an action area we listed on Off the Charts.

Baidu (NYSE:BIDU) out in a nice RedDog Reversal on 12/06, which is a great example of that strategy. The buy price would have been $87.96 with a stop at $85.96 (the low of that day), and stock is now back above $100. Trim and trail any remaining position, especially because the macro chart is a bit more bearish.

LinkedIn (NASDAQ:LNKD) is still inching higher as $107 was that pivot.

Facebook (NYSE:FB) is still not ready to break above $28-28.80, but I think at some point we grab a nice trade long above that pivot.

Intel (NASDAQ:INTC) is choppy but working higher from its lower pivot.

A few weeks back I mentioned the descending channel in the Transports (NYSE:IYT). We usually look for breakouts from that type of pattern, and this group was indeed set in upside motion above $92ish. You may not necessarily look to trade it, but it’s worth paying attention to because of Dow theory and its potential effect on the broader market.

The casinos look okay. Las Vegas Sands (NYSE:LVS), Wynn (NASDAQ:WYNN) and MGM Resorts (NYSE:MGM) has been inching higher but they are not really barn burners at this point.

Metals have been out of play with a downside bias. I don’t see anything compelling here, but I believe that the longer Gold (NYSE:GLD) stays below $163-164 the higher the probability the ETF continues lower.

The Euro Trust ETF (NYSE:FXE) has been strong recently. The gap at $128 held and then the ETF broke above $130 with some ease. Yesterday it reversed and can see some corrective type action. There is some support at $130.50 and then the key short-term pivot to hold is $130.

NYSE Euronext (NYSE:NYX) is halted with a potential deal valued at $33 a share (stock closed yesterday at $24.05).

If the world doesn’t end Friday, I wish everyone a great holiday season. Enjoy your family, friends and life. We are reminded of the blessings we have when we see headlines like Newtown.

Disclosure: Scott Redler is long AAPL, LVS, BAC, FB. Short SPY.

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