Good Morning, Traders. Some weaker than expected payroll data on Friday got traders thinking that the Fed may finally stop raising by the June meeting. Non-farm payrolls were up by the smallest gain since October and came in under consensus. The markets gapped up on the news and ground sideways to up all day, resulting in gains of 138.88 for the Dow, 13.51 for the S&P and 18.67 for the Nasdaq. The Dow has been showing so much relative strength as of late and is now poised to test its all time highs. As shown in the annotated chart below, the blue horizontal line along the top corresponds with the January 2000 high of 11750.28. Current levels are only about 1.5% or 172.54 points away from this level. Until this area is tested there's really very little to do but enjoy the ride. Stay long. The S&P and Nasdaq are not near any key pivots so at this point we may as well wait it out for this last 170 points to be added into the Dow and then reassess. If the month of May closes bullish and we test the 2000 pivot in the Dow, then I would bet that at that point a correction of some degree should ensue as the broad markets will have been up for six straight months and are pulling away from trendlines. All systems go for now, strong stocks in strong sectors exhibiting sound chart patterns should continue to be held and/or accumulated.

Be sure to check for earnings announcements before entering new positions over the next few weeks.

Focus List

NYX - Nyse Group Incorporated
Industry - Financial Services
Side - Long
Trigger - 68.85
Stop - 63.50
Target - 80.00+
Timeframe - multiweek

Notes

• Stop is wide but is essentially just under low of breakout day (Friday 5/5)
• Enormous volume on reversal day
• Weekly hammer right at 20ma (green) support

EOC - Empresa Nacional De Electricidad
Industry - Utilities (Foreign)
Side - Long
Trigger - 30.70
Stop - 29.50
Target - 32.19+
Timeframe - multiweek

Notes

• Three weekly dojis in a row indicate volatility contraction which should expand shortly
• Target listed is only to swing highs, stock is expected to move through this area easily as this is a very solid and mature base that has been building since late 2005

MXO - Maxtor Corporation
Industry - Hardware (Storage)
Side - Long
Trigger - 9.98 / 10.32
Stop - 9.00
Target - 12.00+
Timeframe - multiweek

Notes

• First trigger is over weekly hammer which just formed, second is over top of swing highs for breakout play
• Suggested strategy would be to split entry using both trigger points

AMG - Affiliated Managers Group
Industry - Asset Management
Side - Long
Trigger - 102.10
Stop - 99.00
Target - 110.00+
Timeframe - multiweek

Notes

• Large weekly hammer at end of pullback
• Pullback to 20ma (green) weekly
• Target to new highs
• Strongly consider scaling entry in multiple pieces as stock is volatile and support of weekly hammer shadow is at $95.00

Peter Reznicek is the Chief Equity Strategist and a principal of the Prana Fund, a domestic hedge fund, and ShadowTrader, a subsidiary of thinkorswim which provides coaching and education to its clients on both intraday and swing trading of equities. For a free trial to the full version of The Big Picture or to learn about ShadowTrader's other services, visit shadowtrader.net or send an email to preznicek@shadowtrader.net.