Complete Monday Game Plan

Markets were happy to go to their respective corners Friday to conclude a week in which some bruising was delivered. The Nasdaq took some of the worst blows falling 2.7% on the week. It finished just beneath its 50 day SMA, and recorded an inside day Friday. The S&P 500 looked less beaten up, perhaps saved by the bell Friday staggering at 50 day SMA support. We will see how both benchmarks respond for the ring Monday morning, a day that has not been to kind to indexes recently. Oil slipped another 4% this week, further damaging names in the group. Names like APA, fell 8% this week, falling everyday in the process. ATW was lower by 8%, FTI EXH BCEI by 7%. Stocks in the group near bear market mode are former favorites EOG PSX both 18% from recent 52 week highs. CLR is in bear market mode, 22% off its recent high (wondering how closely Harold Hamms wife is monitoring her husbands holdings). Economically sensitive names derailed recently include GE down 7% this week on slack earnings. CMI down 8.5% this week, and CAT which reports Monday gave up 5.5% this week, ending just above 80. That is a level that was tested 5 times on a weekly basis (weeks ending 7/13/12 thru 7/7/27/12, 11/16/12, and this week), and held. Lets see how earnings affect that round 80 handle Monday. The one strongest piece of evidence the bulls can rest their horns on is the performance of the transports which have been instrumental in this leg up we have witnessed. Bolstered by UNP’s solid earnings report, vaulting it to a new all time high, the IYT is rolling right along, pun intended. Just below its 50 day SMA, it can be bought with a buy stop above its 50 day SMA at 108.25, then added to through a flat base trigger of 112.40.