Futures Quiet As Focus Shifts Briefly Back to Economy

Stocks closed higher for a second straight session on Wednesday, but yesterday’s action was obviously much more bullish than the gap up and fade we saw on Tuesday. The Dow logged its biggest gain (0.65%) in over a month following the Fed’s upbeat Beige Book report and as the White House made its case for military action in Syria. The S&P and Nasdaq were even stronger, posting gains of 0.80% and 1%, respectively.

US futures are near the flat-line this morning after most world markets were mildly positive overnight. With the process underway in Congress to decide on the military course in Syria, the focus is shifting, at least temporarily, back to the economy. The G-20 Summit is underway in St. Petersburg, where Syria is not on the formal agenda but will certainly be the topic of a few water cooler discussions. Today we have the ADP jobs report and jobless claims number, followed by the more significant non-farm payrolls number tomorrow. Many will be trying to interpret what effect the number could have on potential QE tapering at the September Fed rate decision, although I think it might be too close to the meeting to actually influence the decision materially.

Yesterday it was healthy to see the S&P continue to hold its 100-day MA at 1640. The next obstacle to the upside is the 50-day MA that currently stands at 1663. Also keep in mind that volume could dry up today due to Rash Hashanah, the Jewish New Year, which lasts until Friday.

Yesterday we didn’t see the tech ring-leaders (with the exception of Netflix (NFLX)) lead the market higher. Instead we saw the former leaders that have been resting/lagging recently lead the charge.

Google (GOOG) recaptured some of its old magic yesterday. The first divergence came Tuesday when it held the gap up while the market faded into it. Yesterday GOOG followed-through to the upside with a 1.4% gain to close right in front of the 100-day at $872.44. Some continuation today could help it regain the support of this key moving average to attract more buyers in the coming sessions.

Amazon (AMZN) had a strong snap back on Tuesday and was mentioned yesterday on our Price Point Sheet with action buy area at Tuesday’s high of $291.39. The stock triggered this buy price and extended higher to reclaim its 50-day MA. Holding above the $291 support area could keep help it keep its momentum intact.

Apple (AAPL) broke out of the bear flag formation with a gap up yesterday thanks to the surprise announcement of a product event in China on September 11th, the day after its US presumed iPhone event. Use yesterday’s high and low of $496.28 as the new short-term pivot to trade against and see if it can build on yesterday’s gap up.

Autos stocks showed relative strength yesterday on strong auto sales numbers.

General Motors (GM) closed up 5% on Wednesday, posting its best daily percentage gain since December 19 on the back of strong year-over-year sales growth. GM said August sales jumped 14.7% from the year ago period to 275,847 units. The stock has now reclaimed the support of all key moving averages and closed on highs. When you have such a potent igniting bar, it tells me more upside is likely in store. Watch for potential continuation above $35.90.

Ford (F) also registered nice gains of 3.5% to clear some short-term resistance after the auto maker said auto sales last month rose 12% year-over-year, its strongest monthly performance since August 2006. The stock has room for a move back to highs at $17.67 before it runs into the next resistance.

Tesla (TSLA) found its footing again yesterday at $165.50 support area after sliding off its highs following Tuesday’s gap up. On a more micro level, TSLA had a strong snap back into the close to put in a bottoming tail. A move through yesterday’s high of $171.62 could open the door for new highs.

Quick Hits

Gold (GLD) sold off 1.3% yesterday as stocks rallied and worries about QE tapering continue to haunt the metal’s price action. It did find some support at $133.50ish. Continue to use this level as new point of reference to watch.

MGM Resorts (MGM) was mentioned on our Morning Call yesterday as a breakout candidate above $18 and it triggered this action price for a nice breakout before running into some resistance at $18.56 from the prior pivot high. You don’t like to see tails form on an attempted breakout, but as long as it holds above the break out level of $18 it could maintain its bullish composure.

Oil has been choppy amid the volatile Syria headlines, but oil servicer Schlumberger(SLB) has continued to hold in its upper level base. SLB put in another green candle of 0.5% yesterday as the energy stock has been traveling in its upper consolidation range from $80-85. The longer it stays above the 8- and 21-day MAs, the higher the probability we could see a break out above $85.

Under Armour (UA) has been holding higher since its strong bounce off the 21-day moving average at $69 level on August 19th. It had a small breakout at $74.55 yesterday. Look for potential continuation above yesterday’s high of $75.

3-D Systems (DDD) has lost some momentum as it put in a couple doji candles at highs in the last few sessions. Next support stands at $51.45 which could the first buyable spot to test some longs.

Disclosure: No relevant positions. Scott Redler is long FB, SPY, MGM, BAC, BBRY calls.

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