Where Could the Market Top?

Toni Turner  |

In this week's interview with Toni Turner of TrendStar Trading Group, we discuss the market's ability to push higher as catalysts are running out. Also, if, in fact, a top will take place, where is it most likely to occur?

EQ: There’s really no other way to describe the current market besides the fact that it just wants to go up. Thursday saw the market closed down, but just barely. What are your thoughts on trading the current market right now?

Turner: I just don’t see how the current uptrend can continue without a catalyst. We need a really good piece of news. Earnings season is coming to an end, so we’re not going to have the big market movers helping to be that catalyst and push the market higher. As far as economic reports go, jobless claims came out Thursday, and they were down. It was good, but not enough. It wasn’t powerful enough to provide a big momentum.

Late Thursday afternoon, the U.S. dollar broke out against most major currencies, and the market fell, not by much, but it fell swiftly. I was watching the e-mini futures. I think this market is so priced to perfection that any bit of negative news that we get, and for whatever reason the market decides that that is the “Sell in May” signal, then I think more people will pile into profit-taking mode. So I think we’ll see a pullback here pretty soon. So far, however, no negative news we’ve received has been able to hold the market down. When negative news can hold it down, then we will see a retracement.

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EQ: With stocks above all-time highs and surpassing major handles like 1600 on the S&P 500 on 15000 on the Dow, are there any technical levels you can look at to find a possible top?

Turner: Well, if this market could go higher, I see 1675 as the next target on the S&P 500. Although, it would have to get over the current resistance, which of course, is only two days old at 1635. After that, 1650 and 1675 are the next levels moves I calculate as the next resistance areas for the S&P 500.

For the Dow, I see 15,200 as the next level of resistance, with a final resistance that I’ve measured at 15,400. That’s assuming that the Dow could overcome today’s high of 15,145.

EQ: Are there any earnings plays that you’re anticipating?

Turner: There are only two I’m looking at for next week, and it’s not because I hold the stocks, but more for information. They are Cisco Systems (CSCO) and Walmart (WMT).

Cisco comes out with earnings on May 15. I still consider Cisco to be important. The consensus is for$0.49 cents versus $0.48 cents for same quarter last year. I enjoy listening to Cisco CEO John Chambers’ comments, and I am interested in Cisco’s forward guidance. Cisco is, after all, still, and remains a huge global technology company.

On May 16, Walmart’s earnings come out. The Street’s looking for $1.15, versus $1.09 last year. As the biggest retailer in the world, I’m especially interested to see what Walmart’s forward guidance will be and how they project the second half of the year.

EQ: What sectors or industry groups are you watching now?

Turner: For a potential, but not yet, bottom-fishing play, I am watching the Market Vectors Coal ETF (KOL). It will have to prove more to me, but it appears as though it may be making a bottom. It is still lacking volume, so I am distrustful of it.

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