Yellen’s Dovish Comments Boost Futures

Lots of green arrows around the world as US markets set new all-time highs. Some attribute the added strength to Janet Yellen’s dovish remarks ahead of her confirmation today as the new Fed chief.

Markets were down 8-10 handles yesterday morning and staged a strong reversal. We outlined pivots for adjustments. Everyone had the same choice to make at 1760 then 1775 and now we are indicating up 3-4 handles above 1780. Use 1775 as pivot support to see if we can stay above, or whether they try to “sell Janet.” Either way there has been things to do.

Markets have now survived 1929-1987-1998-2001-2007/2008, the potential Euro breakup, the debt ceiling, fiscal cliff, government shutdown and even the Mayan’s end of the world prediction. You could have a macro plan, an intermediate-term process, and/or an active approach. You can use one or combine all three, but frustration and hating on a rally will not put you on the right path.

Cisco (CSCO) did say emerging markets around the world are softer and the stock is down 10% showing you that you can’t just throw a dart at a board and make money – you need a plan and a process.

In today’s Morning Call we will look at the banks again that we started to focus again on last Friday after the stronger jobs report.

The Financial Sector ETF (XLF) gained 0.82% to clear the downtrend resistance at $20.90ish. A break above $21.04 marks a new 2013 highs in this ETF.

JP Morgan (JPM) bounced off its 8-day EMA to close the day up 0.31%. The stock has a tight pattern and looks poised for a potential breakout above yesterday’s high of $54.20. The next pivot to watch is $54.85. A break above that could help it clear the intermediate downtrend resistance that has been in place since July.

Bank of America (BAC) also looks poised to potentially break above its intermediate downtrend at $14.65 for a potential move back to highs at $15.03. The stock is one of the most compelling charts in this group.

Goldman Sachs (GS) lagged its sector a bit yesterday as it closed around the flat line. Holding above $160.75-161 would be constructive for higher prices. The current pivot high to watch is $164.75.

Wells Fargo (WFC) has continued to travel in a descending channel since early July, but it’s been holding higher and looks like it could be ready to break out of this channel at $43.

Solar names remain on the move so we will look at opportunities there as well.

First Solar (FSLR) made new 2013 highs and has helped lead the way for most of 2013.

Sun Power (SPWR) has been holding higher recently. The stock saw a nice push early yesterday then closed on highs to log a 4.45% gain. A move through $32.80 on good volume could bring in some buyers – but yesterday was the day for action.

SolarCity (SCTY) also has a series of higher lows in place since the bottoming tail on 11/8. A break and close above the 8-day EMA at $54.20 could add some power to this bounce.

Trina Solar (TSL) has been holding higher above its 8-day EMA. The stock has a nice upper level wedge that could resolve to the upside above $17.

JA Solar (JASO) continued its quest for new highs as the stock saw 5.3% gain after a day of rest. Holding above the break out level of $11.60 could keep its up momentum intact.

High beta tech also provides opportunities.

Apple (AAPL) continued to find support at its 21-day EMA but also lacked upside momentum above the 8-day. The longer it builds a base above $515, the higher the probability we could see a break above $524ish for a potential move back to 52-week high at $539, but it is lagging a bit.

Netflix (NFLX) is also holding above its 21-day EMA. A break above $339.50 could set it back in motion. Keep it on the radar.

Baidu (BIDU) found some buyers at these lower levels. A break above yesterday’s high of $153 could send the stock higher for a trade

Google (GOOG) had an impressive move to gain 2% yesterday. It triggered above our 1017 buy price and is back to near highs. Holding above $1027 now could keep commitment for a trade above 1042 highs.

Facebook (FB) had a strong move as it reclaimed $47.30, and then some. It hit as high as $48.74 and probably needs a bit of time to consolidate now.

LinkedIn (LNKD) also reversed at the $208 pivot and had its first strong day since earnings. Now it needs to hold above $215 to show commitment. Perhaps if it can get above $220.99 it could continue up towards $225 for a trade.

Twitter (TWTR) made a higher low above the pivot bottom of $39.40, but it needs more time to build this floor. If it can get above $43-44 it could make some think they are missing out.

Zynga (ZNGA) had a big volume burst yesterday and is back in the game. If it can clear $4ish you could see a bigger move take place.

Metals are getting a bounce on Yellen’s dovish statements. I would not get too excited here, but let’s see if it can actually hold a gap up and then we can pay more attention.

The 2x Inverse Bond ETF (TBT) pulled in a bit yesterday and is testing the gap from 11/08. That spot is $77.40. I do think this dip could be buyable. TBT needs to hold $76ish to stay very constructive.

Most traders seem to have one foot in the door and one out, while those very frustrated probably have that door closed. I took off my SPY hedge yesterday we cleared $177.75, and I could add it back on with this up open after saving some money.

Disclosure: Scott Redler is long GOOG, AAPL, TGT, JCP, SCTY, BAC, XLF, LVS, GERN.

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