World markets are mixed this morning as the major headline is China’s worse-than-expected PMI. Europe is trying to brush it off but most of Asia has red arrows. It feels like it could have been worse as the Shanghai only have back a third of the recent gains. The Nikkei is off 0.09% but still in the upper range. Markets have been trying to ignore the China headlines but they are getting more frequent.
S&P futures are down 6-7 handles as this lethargic upper range continues. It felt ready to break out yesterday, but overnight news didnt cooperate. Intermediate-term support stands at 1830ish. If we trade below this for the majority of the day some could reduce risk once again. S&P 1815ish is the 2014 pivot low. If we go from red to green today 1850ish would be the pivot resistance for adjustments.
Last night we had notable earnings moves from Netflix (NFLX) and eBay (EBAY). NFLX soared on stellar earnings numbers and remains up about 17% this morning. Let’s see how it handles the gap. EBAY jumped last night despite a mediocre report. The company announced a $5B share buyback plan and Carl Icahn announced he had built a more-than 1% stake in the company and would place two members on the board. He is urging EBAY to spin-off its PayPal unit, which is the real growth engine. EBAY has pulled off significantly from last night’s high, now we will see how it treats the gap.
Today is a busy night for earnings, names to watch are: Microsoft (MSFT), Starbucks (SBUX), McDonald’s (MCD), Fifth Third (FITB), Lockheed Martin (LMT), Nokia (NOK), Southwest Air (LUV), Juniper Networks (JNPR), ETrade (ETFC), Intuitive Surgical (ISRG), and Union Pacific (UNP).
Solar stocks are setting up after some recent rest.
Trina Solar (TSL) has been holding higher above its 8-day EMA. The stock had a nice move up to log almost a 5% gain yesterday. Some continuation today could set it up for a break out at $17.25. The stock looks tight so keep an eye on this trade idea.
Yingli Solar (YGE) is also finding support along its 8-day EMA as the stock continues to build a tight bull flag pattern to digest its recent big gains. A break above $7.32 could bring in some buyers.
Jinko Solar (JKS) has been building a tight upper level base above its 21-day EMA with a healthy accelerated uptrend intact since December. A move through $36 on good volume could lead to additional upside momentum.
Solar City (SCTY) held most of its recent big gains as the stock found good support at its 8-day EMA on Tuesday. There is no real set-up at the moment, but as long as it holds above the gap at $71.57, its pent up momentum stays intact.
Biotech remains the hot sector.
Biogen (BIIB) was featured as Marc Sperling’s Trade Idea of the Week, with an entry at $302.95. The stock did see this breakout on Tuesday and had some follow-through yesterday. Some digestion above yesterday’s low of $306.32 could set it up for another move higher.
Celgene (CELG) has been forming an intermediate-term range that could resolve to the upside if the stock breaks and closes above $170.88. The next pivot to watch after that is $174.66.
Regeneron (REGN) had a potent breakout of its monthly descending channel last week. The stock has been consolidating above its 8-day EMA to digest this big move which shows some commitment. A break and close above $299 could send it higher.
Amgen (AMGN) had a potent break out at $120 to log a nice gain of 4.3%. It’s prudent to book some profits after a big move. Trim and trail.
Ariad Pharmaceuticals (ARIA) is up more than 11% at around $7.50 this morning on reports that the big pharma players could bid as much as $20 for the stock in order to secure its promising leukemia drug. Keep an eye to see if it gets continuation to the upside.
Gogo (GOGO) has been perking up a bit since dip buyers stepped in at $22 last week. It has reclaimed the support of 8- and 21-day EMA and some continuation above yesterday’s high of $25.42 could set it in motion for higher prices.
Kandi Technologies (KNDI) found support along its 8-day EMA after a few days of rest to get back in motion yesterday. The stock logged a 4.3% gain and looks potentially poised to see some upside follow-through above yesterday’s high of $14.30.
Himax Technologies (HIMX) had a potent breakout from our Off the Charts newsletter on Tuesday, reaching our target of $15.30 within one session and closing the day up nearly 7% despite closing off highs.
Twitter (TWTR) could be worth a look if it could break and close above $64. The stock has been holding above its 8-day EMA for three sessions. Use $61.50 as the new support to trade against.
Disclosure: Scott Redler is long SPY, BAC, JBLU, BRON, TBT, GOGO, XHB, MU, AAPL, TWTR, EBAY calls, AAPL calls.