World markets maintained a positive tone over the weekend as the equity rally remains underway. The Shanghai Composite that double bottomed over the Summer led Asia overnight making multi-week highs. Japan also continues to act well as it’s provided multiple opportunities long during 2013. Europe is also holding steady after some spots made five-year highs. There is lots to like on all time-frames.
The last week-and-a-half was like a lesson in Technical Analysis.
The Rally was re-born with a Red Dog Reversal on 10/9 when we reclaimed 1655.
10/10: Textbook “gap and go” with potency that closed above the Descending Channel that formed in late September.
10/11: Showed commitment above that Descending Channel.
10/14: Market absorbed the gap down despite no debt deal, held that low on 10/15 and showed resilience.
10/16: Power resumed as we cleared the two-day flag and took out SPX 1700.
10/17: New 2013 highs with a close above 172.
10/18: Healthy follow-through.
Here we are today with the S&P a bit overbought and somewhat flat futures this morning.
We have support at 1742 then 1736, with prior highs at 1729. Pivot resistance is 1745.
http://www.cnbc.com/id/101125152 Some of our thoughts were included in CNBC’s blog this weekend.
As we enter this week we have a new earnings calendar to focus on as well as some economic numbers that have been delayed due to the shutdown.
In tech we saw a lot of great action last week as Google (GOOG) impressed on Thursday and ignited a nice high-beta move on Friday.
The VTF did see me put on some Google calls which did turn out to be a nice trade. GOOG is up another seven dollars this morning and will need some time to set up again.
Baidu (BIDU) also ignited into 2013 highs and has a new pivot at $166.39.
Amazon (AMZN) ignited through 2013 highs of $323 and extended well. Your new pivot is $331.89.
Apple (AAPL) has been steady to the upside since our buy price on Off the Charts around $493 and is now opening above $510. It looks good to potentially continue higher and earnings aren’t until next Tuesday.
Facebook (FB) has made a huge move, and there have been a lot of calculated set-ups along the way. The last one was buyable at $51.60ish with a big move Friday. Your new inside range has support at $53.60 and resistance at $54.82, I think it needs some time now.
LinkedIn (LNKD) woke up again. The stock needs to hold $244.50 and with time could be back on the move above $252.30.
Yahoo! (YHOO) is trying to consolidate above $32.30ish and with time could get going again above $34.00-$34.40.
Chinese internet names have been great. Look at the basket of them: SFUN, QIHU, SINA, SOHU, YOKU – we’ve listed them in Off the Charts several times of late, including SFUN last week.
Bank earnings have been underwhelming but with the sector beaten down a bit it has been enough to spark a bounce.
JP Morgan (JPM) is in the news with a huge settlement in the works – let’s see how it affects the banks today. As long as JPM holds $53.25 I don’t think this group will get too much pressure.
Some ag stock look like they are setting up for lower-level catch-up trades.
Mosaic (MOS) was featured in our Off The Charts newsletter last night as a breakout candidate if it could get above $47.10. After that the next obstacle would be the 100-day at $49. A break and close above this could lead to a gap fill at $52.
Monsanto (MON) is another compelling setup. The stock has regained the support of all key moving averages. It has an intermediate wedge pattern that could resolve to the upside at $107.10.
PotashCorp (POT) also reclaimed its 8- and 21-day recently. The stock entered the gap from July 30th on September 10th after a nice three-day move up. It’s been seeing nice consolidation since. A break and close above $33.20 could open the door for a gap fill at $37.
CF Industries (CF) had a nice push up on Friday to gain 2.7%. The stock is hovering around the short-term resistance at $217. A break above this could bring in some buyers.
SolarCity (SCTY) had a big time move last week. I would say now it needs some rest, but it’s already up more than 4% this morning. The recent pivot high is $59.90. The last buy price was $48.20ish, I think now you have to wait for a more calculated set-up rather than chase.
Tesla (TSLA) reclaimed some moving averages and is getting tight again. It did lag a little bit last week. As long as it holds $181ish I think traders could look for another move above $186-187.
Metals are trying to stabilize a bit but aren’t much to get excited about.
Gold (GLD) needs to hold $126.60 to stay interesting. Perhaps there could be another cash flow trade long if it can take out $127.86.
Keep looking for good set ups, and stay with the trends and price action instead of the noise.
Disclosure: Scott Redler is long AAPL, AMAT, XHB, ZNGA, MEET, GLUU