World markets are mostly positive after last week’s wild ride. Sometimes volatility is tradable, and sometimes it can be “tough volatility.” Recent action falls in the latter category. We talk about quick feet, well last week’s action made some quick feet look very slow.
Thursday it looked like we were headed for at least a multi-day correction after a major engulfing day in the S&P and weakness in high beta tech and some other key sectors. Then on Friday that day was matched to the upside.
After a stronger than expected jobs report on top of a stronger GDP from Thursday, the taper talk started to re-emerge. Banks gapped up led the way on Friday and so did some other “growth areas” that were hit earlier that week.
Futures are near the flat-line this morning. If we see some commitment in the next session or so above 1760-1765, the probability increases that we could take out 1775. The melt-up could continue through the rest of the year.
The Banks did lead Friday and some attention should be paid to them this week for potential continuation.
The Financial Sector ETF (XLF) gained 2.26% Friday, a potent move that could take it back to the highs of 2013. It now needs to show some commitment above $20.60ish.
Goldman Sachs (GS) saw lots of volatility during the last two trading sessions last week. Overall the stock looks like it could be ready for a break out above $164.30. It has room for a potential move up to $166-167 before it runs into some resistance.
Morgan Stanley (MS) had a big engulfing bar on Friday to clear some short-term resistance. Look for potential upside continuation above Friday’s high of $29.59. Next resistance sits at $29.97 from the 52-week high.
Bank of America (BAC) outperformed its peers to register a 3.70% gain on Friday. Some digestion above $14.10 would be constructive for higher prices.
Citigroup (C) also joined the rally. It has some resistance at $50.20 from the downtrend that has been in place since October 21. A break and close above this trend line could send the stock higher.
High beta tech held on by a thread last week with lots of mixed action.
Apple (AAPL) broke $515 on Thursday and then reclaimed it on Friday. With time this could get more interesting if it breaks and closes above $525ish.
Google (GOOG) had volatile week but held its earnings gap, so it can still be deemed strong. The weekly support pivot is now $1007. A move over 1023-1025 could help it get some momentum back.
Amazon (AMZN) provided some short opportunities into the earnings gap that started at $352. It did go as low as $341.88, now see it if can hold above that. AMZN feels a bit bent but not yet completely broken.
Netflix (NFLX) still hangs around above the 50-day after the sell-off post earnings. If it can get above $336ish, perhaps it could get back to $345ish, but it’s not very compelling.
Priceline (PCLN) has seen crazy action since earnings. It closed strong Friday and 1077 is Friday’s high to trade around.
Twitter (TWTR) headlines said it “soared” on IPO day, but we all know it failed the “art of the first day.” It opened at $45.10 and closed at $44.90 after hitting $50, then drifted lower on Friday. I don’t have much interest here as I think it could see $32-35 before it looks like a better entry. Friday’s pivot is $40.68.
LinkedIn (LNKD) finally found a bit of support after getting beat up post-earnings. There was a potential Red Dog Reversal entry around $210. The spot to trade against is $208.35. If it continues above $216.45 there is a lot of resistance at $221.50-225.00.
Facebook (FB) is forming what looks like it could a head and shoulders top pattern. Sometimes, especially when everyone is watching a pattern, necklines do hold. So If you are going to play this short, make sure there is a high volume break and close below $46.50-47.00. The stock did exceed all our 2013 expectations and does seem a bit vulnerable here.
Yelp! (YELP) got hit hard from $70+ down to below $60 and then reversed on Friday through the $61.40 pivot. If the bears want to stay in control here, they won’t want to let the bears take back $66.
The Ags perked up a bit and could have some tradable set ups this week from lower levels as money continues to rotate.
Potash (POT) has a nice bull flag above the 8-day EMA. A break above $32.76 and could bring more attention for a potential move up to retest the 200-day at $35.50ish.
On Friday, Mosaic (MOS) broke above the monthly resistance to trigger the buy price at $47.10 that was mentioned in our Off The Charts newsletter before the stock had earnings (our philosophy is to not take stocks into earnings so we took this one off the watch list). Holding above the breakout level could lead to higher prices. Look for potential upside follow-through above $48.
Agrium (AGU) joined the group’s rally to log a 2.27% gain on Friday. A break and close above the 200-day at $90ish could add some fuel to its rally.
CF Industries (CF) also had a big engulfing bar on Friday to approach the recent resistance of $220ish. Some digestion above $214.215 would be healthy for higher prices after a big move up.
Other notables to watch
Tesla (TSLA) got hit hard since earnings. It did find some footing on Friday with a Red Dog Reversal around $137.62 and is up a few points pre-market. It if can get and hold above $140.60 for a 15 minutes or so, perhaps it could retrace back up to $150.00-153.50 for a trade.
Rates did spike on Friday. The 2X Inverse Bond ETF (TBT) started to bottom a few weeks back. We discussed the potential of getting back into some around $73.50ish, and now there is a big gap to digest that starts at $77.37ish.
The market initially sold off on good economic news last week, so it was positive to see stocks rally on some good news during Friday’s session. Hopefully good news remains good news for the market.
Disclosure: Scott Redler is long XLF, POT. Short FB.