World markets are again mixed as most are trying to figure out if this will be shallow or a bit deeper than the normal corrective phase that we’ve seen. Europe has been down for five sessions and is trying to stabilize but there doesn’t seem to be urgency to buy yet. The Nikkei fell 3.7% in two sessions after hitting six-year highs just, and the Shanghai is doing what it can to hold higher. India showed some strength overnight.
Yesterday the S&P touched 1779 after hitting an intraday high Friday at 1813. That’s about a 35 handle move in four sessions. Some key stocks did fare okay in that mini corrective move that started on Friday’s Red Dog Reversal. Now we need to see if yesterday’s pivot is the one that holds into year-end. We did hold the 21-day and have that as our spot to trade against.
Today we get jobless and GDP data. Many are blaming the weakness in the market this week on Monday’s strong ISM number and the fact that good news is now bad news. The oscillators were up at 55+ now we are below 0, so it could just be that we were overbought and needed a rest. I’d like to see good news become good news. Tomorrow we get non-farm payrolls.
Recently the action has been very narrow, but tradable with a lot of divergences. Look for the set-ups and continue to rotate through the best patterns. Macro investors don’t care if we close up 2-3% from here or down 2-3% from here as they’ve had a tremendous year, but it matters to those that try to generate alpha or trade for P&L.
In today’s Morning Call we will follow up on the Social Media space that treated us very well yesterday.
Facebook (FB) showed early relative strength as it was one of the first stocks to go positive, then buyers stepped in aggressively during the trading session to push the stock through $47.50 resistance level. FB finished with a 4% gain yesterday. Part of yesterday’s move was based on reports that FB could be added to the S&P 500, but that did not happen and now the stock is lower pre-market his morning. Watch to see how it reacts after the open.
Twitter (TWTR) also had a great breakout at $41.60 to clear the down trend resistance that has been in place since 11/8. The stock registered nice gains of 5.61%. It’s hard to chase after a big move, some digestion above $42 would be constructive for a potential additional entry in the coming sessions.
Yelp! (YELP) also enjoyed a rally of 4.65% after basing at its 100-day for a few sessions. A break and close above its 21-day EMA at $63.33 could lead to additional gains.
LinkedIn (LNKD) is trying to consolidate its massive 2013 move. A move above $222ish on some volume could trigger some additional momentum.
Banks that ignited almost a month ago on the back of a stronger jobs report could be a focus again. They are holding up okay and could be looked at.
Citigroup (C ) opened lower on a downgrade but held its 21day and filled the opening gap to the upside to erase all of its overnight losses. A break and close back above its 8-day EMA at $52.26 could have it acting better. It could use a little time.
Bank of America (BAC) has reclaimed its 8-day EMA at $15.60 with a 0.58% gain yesterday. Basing above the new support floor of $15.36 would be healthy for higher prices moving forward.
JP Morgan (JPM) also saw a nice push right off the open to erase the overnight losses. The bank closed in positive territory with a 0.58% gain. Look for potential upside follow-through above yesterday’s high of $57.47.
Goldman Sachs (GS) also closed in green with 0.39% gain to get back above its 8-day EMA at $168.19. Holding above this key moving average could keep its momentum intact. A break above $171.58 marks a new high (it’s been a very tricky stock).
High beta tech continues to provide a lot of opportunities both ways.
Apple (AAPL) has been a great vehicle for us the past few months. It gave a nice set up through Thanksgiving from $526-555 and now there is news of confirmation of the China Mobile deal. AAPL is up 10 points this morning as a result. Let’s see whether we get another gap and go or whether they try to sell the new. The next big resistance is $585.
Google (GOOG) continued to base above its 8-day EMA to prove that any pull back into this key moving average has been buyable. The stock might not be ready for a new highs yet, so continue to use the 8-day EMA as the key support to measure the composure of this market leader.
Baidu (BIDU) found support at its 8-day EMA to close on highs. The stock looks like it could be ready for a move through the $170 pivot level so keep an eye on it.
Amazon (AMZN) found some footing at the 8-day after it had trouble with the $400 mark. Use yesterday’s low to trade against..
Tesla (TSLA) gave back some of Tuesday’s big gains but held the upper third of that move. Holding above $133-$137 could keep traders interested here.
Netflix (NFLX) opened up and reversed pretty hard yesterday giving a sell signal or “short signal.” It might need time now. See if it gets downside follow-through below $356 – that’s the action pivot.
Some biotechs continue to look decent.
Acadia (ACAD) has a nice pattern if it can get above $25.25 on volume.
Insy Therapeutics (INSY) looks good if it can above $45.80ish on volume.
Regeneron (REGN) could get some momentum above $298ish.
For Celgene (CELG) the key momentum level would be above $162ish.
Isis Pharmaceuticals (ISIS) looks compelling if it can above $39.
Casinos are also acting well.
Las Vegas Sands (LVS) broke out yesterday with an explosive move after we listed it on Off the Charts this week. The catalyst was a tight pattern and credit rating upgrade from S&P. I think it could continue. Wynn Resorts (WYNN) and MGM Resorts (MGM) are also in play.
Metals tried to bounce back and still are a bit random and erratic but trapped in serious downtrends. I’d take a very short-term active approach or give them room. If the GLD wants to build upon this bounce, it should hold $118.50ish.
Try to have some quick feet, look for the action and participate, just don’t stay too long. OR just sit back and enjoy the macro ride.
Disclosure: Scott Redler is long AAPL, BIDU, FB, TWTR, BAC, GS, XHB. Short SPY.