A decision for Greece, retail confessionals and key time and price testing for the market are on traders’ radars this week. For the five day period the SP-500 (SPY) is up 1.38%, within one percent of its May and three year highs—and lending itself to some likely “sell-e-brating after celebrating.”

THE WEEKLY NUTSHELL

• “Bulls Take Back Friday’s “$!#%!.” Following Friday’s 0.69% decliner, bulls bounce right back with a bullish gap and closing gainer of 0.68% Monday. The fearful weekly doji is placated with an upside resolution following Greece’s surprise weekend agreement to the EU and IMF’s demanding austerity plan in order to avoid imminent default. Bullish gains hindered by realization of the country’s long road ahead and actual concerns of implementing the deal in practice. Apple (AAPL) shares continue to support the broader market for a third session as it tests $500 while reaching fresh all-time-highs on strong gains of 1.86%.
• “Not-So-Terribull Tuesday.” Profit-taking looking fairly slippery intraday is cut down with final 30-minute rally with SP-500 closing off just 0.09%. The fast climb from session lows and losses of 0.80% are in no small part attributed to one very large and very green Apple (AAPL) whose index weighting of 4% and gainer of 1.36%, take a bite out of market bears. Profit-taking tied to Moody’s sovereign debt cuts to EU periphery and negative outlooks for France and UK. Total retail sales for January increase of 0.4% falls short of 0.8% forecast but axing autos produces better-than-expected 0.7% versus 0.5% estimate. Germany’s ZEW index shows sizable improvement in business sentiment and Bank of Japan announces sizable $129B asset purchase expansion. 
• “A Wins-Day for Bears.” A bearish technical bite out of Apple (AAPL) from all-time-highs to an engulfing -2.31% decline on massive volume drags SP-500 to loss of 0.54%. Out-the-gate, bulls’ ply their trade higher on vague word China’s central bank is interested in assisting Europe with its sovereign bailout fund. Weak but better-than-expected GDP out of Eurozone also enjoys bulls support, as do a stateside trifecta from Empire, industrial production and housing. Joining Apple as anxious reasons to take profits, a less-than-tasty “FIG” composed of disappointing dissent within the FOMC minutes, Iran’s latest saber rattling and growing concerns Greece won’t fulfill its austerity obligations.”
• “Right Back At-Ya! Thursday.” Bulls reclaim Wednesday’s losses despite “FIG” concerns and Moody’s review of key money center banks (BAC, C and GS) with 1.10% gain to marginally higher and 9 month high less than 1% below the May 2011 highs. Continued weakness in Apple (AAPL) in first half is shaken off before reversal off 10SMA test and 7.6% total pullback from Wednesday’s highs are gobbled up to produce 0.91% gainer. Helping bulls from the get-go, the EUR/USD finds quick key technical support off 1.30 test and rallies to 0.85% finish. Stateside economic data provides bulls with a triple on better-than-expected claims data of 348,000, housing and permits and improved Philly Fed of 10.2. Also, technical breakout and strong 4.09% gain in Microsoft (MSFT) leads influential tech sector, while muscular financials (XLF) manage to score 1.52% increase despite downgrade warning.
• “February Bears Expire Quietly Friday.” Bulls’ secure modest 0.24% gainer in SP-500 in run-of-the-mill, heavy volume and lighter volatility Expiration Friday in front of Monday’s EU decision for Greece. Continued Iranian saber-rattling and bullish anticipation of Greek deal find bulls in US Oil Fund (USO) extending its gains by 1.20% and totaling 4.55% for the week, its strongest of 2012. CPI for January comes in mixed with total prices rising 0.2% vs. 0.3% estimates but core level increase of 0.2% doubling views of 0.1%. Leading indicators rise by 0.4% and narrowly miss 0.5% forecast.

WEEKLY CALENDAR OF KEY UPCOMING EVENTS

Monday: US Holiday.
Economic: Ongoing wild card credit market drivers spearheaded by Monday’s EU verdict on Greek bailout.

Tuesday:
Economic:  NA.

Earnings: Barnes & Noble (BKS), Home Depot (HD), Macy’s (M), RadioShack (RSH), Steve Madden (SHOO), Stillwater (SWC), Wal-Mart (WMT), Walter Energy (WLT), Weatherford (WFT).

After Hours: Chesapeake (CHK), Dell (DELL), Chiquita (CQB), Herbalife (HLF), Intuit (INTU), Kraft (KFT), Nabors (NBR), Newfield (NFX).

Wednesday:
Economic:  Weekly Crude, MBA Mortgage Index, Existing Homes (4.63M).

Earnings: Chico’s (CHS), Garmin (GRMN), MGM (MGM), Quanta (PWR), TJX (TJX), Toll Bros (TOL), Yandex (YNDX), Zale (ZLC).

After Hours: Analog Devices (ADI), Avago (AVGO), Continental Resources (CLR), Express Scripts (ESRX), Fluor (FLR), Hertz (HTZ), Hewlett (HPQ), Jack Box (JACK), KBR (KBR), Pan Am Silver (PAAS), Williams (WMB), Yamana (AUY).

Thursday:
Economic:  Weekly Claims (355K), Continuing Claims (3.45M), FHFA Housing.

Earnings: DISH (DISH), Foster Wheeler (FWLT), Kohl’s (KSS), Omnicare (OCR), OfficeMax (OMX), Safeway (SWY), Target (TGT), Tenaris (TS), Tim Horton’s (THI), Trina Solar (TSL).

After Hours: AIG (AIG), Autodesk (ADSK), Crocs (CROX), Deckers (DECK), Gap (GPS), Marvell (MRVL), Monster Bev (MNST), OmniVision (OVTI), Salesforce (CRM), TiVo (TIVO), World Fuel (INT).

Friday:
Economic: Michigan (73.0), New Home Sales (315K).

Earnings: Alpha Natural (ANR), Endo Pharm (ENDP), JC Penney (JCP), Newmont (NEM).

TECHNICAL OUTLOOK

Figure 1: SP-500 (SPY) Weekly Chart

A weekly doji decision and overbought VIX ($VIX) from the week prior helped ensure yet another bullish outcome for the broader market with a gain of 1.38% in the SP-500 and prices now within 1% of a full retest of the May 2011 highs. With the VIX now back into the bullishly-constructive high teens and not yet oversold short-term relative to its 10SMA and after a bit of worrisome, mid-week stabilization above 20; it would appear the bulls will be able to challenge those highs in the SP-500. However, those same buyers should be wary of overstaying their welcome.

“Celebration-Turned-Sell-e-bration?” More important to us in terms of risk management, this week marks the end of two key Fibonacci weekly time cycles which have defined the bulls’ run from corrective territory. Both the October and December lows are entering their 21st and 13th weeks and are viewed as confirmation of a turning point for the market. To keep our illustrated Fib-based butterfly in play and looking symmetrically constructive for an ultimate price objective of 1400 in April, a pullback of 3% to 5% taking one to three weeks to produce looks about right before considering stronger opportunities for bulls to buy.

MARKET LAB
Bullish Technicals

• First Week Effect 2012.
• October’s historical bottoms.
• “Best Six” period for market.
• VIX into normalized range in mid to high teens.
• Early Day 3 and late Day 17 FTDs.
• Fib-based Butterfly, bullish projection into completion above prior 2011 highs.

Bearish Technicals

• 1930 Bear Market Rally repeat states EW Intl.
• Bear market time and price still in effect.
• Historically weak FTD signal.
• Entering weeks 21 and 13 of bull run from October and December lows.

Chris Tyler
Senior Options Writer, former Market Maker & fulltime Option Hedge Hog Advocate
Optionetics.com ~ Your Options Education Site
Visit Chris Tyler’s Forum
 
The information offered here is based upon Christopher Tyler’s observations and strictly intended for educational purposes only, the use of which is the responsibility of the individual.