Most world markets are green this morning with the exception of China’s Shanhai Composite, which finished down 2% as they are having some liquidity problems that bear watching over the next few weeks/months. Europe was up more but still green. The Nikkei is hovering around six-year highs.
Overall though it was a pretty quiet overnight as markets digest gains, which is exactly what the bulls want to see. US indices have so far consolidated Wednesday’s gains well and have a slight positive tone this morning. The S&P has support at 1803-1806 then 1795ish. If the index can push above 1813 I think it could head to 1840-1860 in the fist quarter of 2014.
December’s theme has been a lot of divergences and stock-specific action. The T3 Live team has done a great job of identifying a lot of them on Off the Charts, the Price Point Sheet and real-time in the Virtual Trading Floor.
SolarCity (SCTY) was a big winner yesterday, suring nearly 8% after being added to the Off the Charts long watch-list on Wednesday night. After such a big move I think it could use some rest before continuing higher, but it doesn’t have to.
Twitter (TWTR) got back on track with a 3.57% gain after a three-day pull-back. With its small float and the fact that the company is in its hyper-growth phase, I think it could be just a matter of time before it takes out the previous high and continues to rally.
Groupon (GRPN) has been another big winner from Off the Charts as it tacked on another 3.37% worth of gains yeserday. It’s hard to buy here, but just another example of divergences and stock-specific opportunities we have been highlighting.
The banks were a focus for me on taper day, and continue to look like their composure is improving.
Goldman Sachs (GS) had the cleanest set-up in the group and staged an impressive breakout on Wednesday move. Yesterday it rested, but with some sideways action I think it could go higher.
Bank of America (BAC) had been stuck in a tight multi-week descending channel prior to Wednesday’s Fed decision, but after the announcement staged a massive Red Dog Reversal to lead the banks in terms of percentage gains. Yesterday it showed relative strength again but finishing green, so it could continue higher as well.
In retail, we have highlighted set-ups in Kors (KORS) and Under Armour (UA) that look compelling. Yesterday both staged slight reversals and we will see what that leads to. However, with some rest I think they could continue higher.
Basic material stocks bear watching as well for potential cash-flow trades as the group perked up yesterday.
US Steel (X) broke out to new 52-week highs thanks to a 5.22% gain, and has plenty of room to the left on its chart after getting beaten down over the past few years.
Cliff Natural Resources (CLF) does not quite have as clean of a chart, but has found some footing this week and posted a 3.62% gain yesterday. With short interest of more than 20% it could squeeze further.
Disclosure: Scott Redler is long TWTR, FXI, GS, BAC, C.