Futures Straddling Flat-Line Ahead of Traditionally Light Trading Week

By Dec 27, 2011, 8:56 AM Author's Blog  

US stock futures are walking the flat-line Tuesday morning following the long Christmas holiday weekend. London markets remained closed Tuesday while French and German markets have surged Tuesday following the break in trading. There is data on tap this morning, with the Case-Shiller housing index at 9am ET and the consumer confidence reading at 10am ET, which is expected to rise from 56 in November to 60 this month.

In corporate news, Sears Holding Corp (SHLD) is up almost 2% this morning after announcing plans to close 100-120 K-Mart and Sears stores after comparable sales fell more than 5%.

Last week, markets finally rewarded market participants looking for some semblance of follow-through. Indices have remained in volatile mode, but were finally able to hold higher last week with a little help from Santa. Indices frustrated as many traders as possible over the past few weeks, but finally ignited last Tuesday to give us a tradable move that closed strong on Friday. The S&P and the Dow are above all important moving averages, and the Nasdaq is the last to try and take back the 200-day.

The indices are trying to resolve this Macro Wedge/Pennant to the upside. This week is known as one of the lightest/slowest few day stretches of the year, and I estimate that 75% of the Santa Claus rally has already been put in the stocking. The bulls do have the momentum for now. If you did position last week for Santa’s good will, I would take some profits and only trail the last tier very carefully.

TECHNICAL TAKE

The S&P is opening around flat this morning, and a close above 1259 would be constructive for the bulls. The Markets might try to probe the 1248-1254 support area, but this area should hold to keep bullish composure intact into the New Year.

Next Resistance at this point is 1275-1277, which is a realistic target before Lady Gaga helps ring in the New Year in Times Square this weekend. The next level is the October 27th high of 1292, which I think is an unrealistic target before we get some new 2012 money put to work.

Now let’s take a look at the stock-specific breakdown.

Apple (AAPL) was my best vehicle for gains last week. I sold my lot on Friday because of the size of the move. Next big resistance is the gap that starts around $409-$410. It can float up to that area, but I will just actively trade it now. I might even look for a cute short today for a few points using $403.59 as a pivot.

Google (GOOG) is still building what I think will be a explosive pattern for 2012. The real pivot to buy and get this stock moving is $635-$637. In my 2012 predictions I put a $750-$850 price
target on this for next year.

Sina Corporation (SINA) is trying to put in a small bottom to trade against. I might try some for a quick trade through $57 area.

Baidu.com (BIDU) is a very sloppy and weak stock at this point, but it might be worth a trade this week if it can get above $118-$119. I wouldn’t expect much.

Amazon.com (AMZN) is still very weak under the neck line of the head and shoulders topping pattern. The longer it stays below the $185-$190 area, the greater the odds for a move down below $150 in the first Quarter of 2012.

VMWare (VMW) has been a broken/weak stock for the last 3 months and got hit hard with the Oracle (ORCL) news. It was upgraded today and there is some room to bounce back to $86.

Oracle (ORCL) did hold the $25 level we outlined on earnings day. It’s trying to get in the big gap from the disappointing earnings day and could be a decent slow day-trade if it gets above $26.08 if you didn’t get caught in the carnage.

Groupon (GRPN) looks like it’s setting up for a nice trade. It will need to get above and stay above $23.50 to get momentum.

Fusion-IO (FIO) worked well from last week as it broke its descending channel to the upside. The $28 target is in the bag. If you are swinging some for a trade, the next level to sell is $30.

Angie’s List (ANGI) looks okay and is something to watch for next year.

LinkedIn (LNKD) there is not much to talk about here- but it feels like it should get above $65-$67 at some point.

Intuitive Surgical (ISRG) has been a strong stock this year that I have highlighted in my notes many times this year. It had a great break out on Friday and should continue.

The credit cards, MasterCard (MA) and Visa (V) continue to look good. These were also macro long investment options we’ve mentioned throughout 2011.

Exxon Mobil (XOM) has been a rock star and one of my best macro picks for 2011. It’s a bit extended now, I would wait for a better set-up.

Goldman Sachs (GS) got a nice oversold bounce last week, and I sold it after it reached my short term target of $95. If it can stay above $92.50, perhaps I will look to this again for a move back to $98-100, but I’m flat this one now.

The Oil Service HOLDRs ETF (OIH) had a nice bounce last week and the inverted head and shoulders still looks good. Some are positioning here for 2012 performance, I’d like to see this hold higher now above $113ish and then we can re-enter above $116.50 for a move to test the downtrend area of $121-$123. Stock specific oil service names I like are Schlumberger (SLB), Occidental (OXY), and Apache (APA).

Gold is a tricky trade right now, but the bottom line is that demand seems low. I think Gold sees $1,400-$1,440 before it sees $1700+.

As a trader I will keep this week very light. Last week I took a small portfolio approach long and was rewarded, but this week I will be a bit more flexible both long and short and just try and add some gains to close off the year on a high note.

Enjoy the holidays and appreciate the little things.

Disclosures: Scott Redler has no positions

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