The headlines around the world continue to reflect instability, but US markets continue to shrug them off and charge back towards the uptrend line that was broken on June 20th. That’s why we employ a technical analysis-based strategy — sometimes we aren’t smart enough to figure out “why” are happening, but at the end of the day price action is king. This morning, futures are up 8-10 handles on the heels of Friday’s strong jobs report.
Last Wednesday, we had every reason to go down. Macro headlines were downbeat and US futures were down 10+ handles, but the market didn’t fall apart. Then, on Friday, the S&P finally reclaimed its 50-day moving average as bond yields made higher highs, something many doubted could happen. The Russell 2000 hit all-time highs on Friday and the financial sector–led by the regional banks–found an upside bid. Our “go-to” list of high-beta tech stocks continue to take turns showing relative strength.
Due to the fact that there are macro crosswinds and it IS Summer trading, I don’t think you have to be full-boat long, but at this point I certainly don’t think you should consistently have short on the brain. Goldman’s trading desk re-iterated its call for S&P 1750 for 2013, and the timing this time around doesn’t smell as bad. When they updated their targets back on May 21st markets were very overheated and extended. My stance was that I think we could see a corrective phase back down to the 100-day (1577) over the Summer (we hit 1560), but that the highs of the year weren’t in. You can take that statement and apply it to whatever timeframe you trade on, and if you operate on longer term time-frames you could stay the course. Never let the fear mongers scare you out of equities during corrective phases.
The S&P has some intermediate resistance at 1640-1642, and then the spot it failed is at 1652-1655. Friday’s high of 1632 should serve as support to keep momentum guys very active. If the 50-day MA holds around 1625, it could keep things in motion.
We have been highlighting a bevy of very promising chart set-ups on our Off the Charts newsletter, but most of those triggered Wednesday and Friday so today’s up open could be a little bit tricky. Tune into today’s Morning Call video to get more insight into individual names we are watching. Stocks/ETFs we will talk about include GOOG, AMZN, TSLA, LNKD, NFLX, PCLN, CMG, DDD, XONE, SSYS, YHOO, V, MA, BAC, GS, YPM, IWM and SMH.
Disclosure: Scott Redler is long TBT