World markets are mixed as we enter our first full trading week of 2014. It seems like a lot of people are all worried that this is the first time in multiple years that we’ve had such a soggy start. This week should give us some clarity as I do think the profit-taking has been controlled and somewhat normal.
Europe is trying to find some footing as Asia had an ugly session. The Nikkei followed our lead to the downside with a 2.35% decline, with some investors appearing to lock in massive gains from 2013. The China concerns is getting louder as its liquidity continues to be a focus. This region has been much weaker and the FXI is now below the 200-day. My rule is if it stays below that for a few sessions it could become a bigger problem.
S&P futures are up 1-2 handles trying to hold above the 8-day EMA. Our first new point of reference for 2013 is 1827ish. Below this level I do feel that 1813-1815 could be important support. I think some intermediate-term guys could get more tactical if this doesn’t hold. A close below that could lead to a pretty quick move to 1792. I do think that level would limit the downside for January if we see that area, but that’s still a big if… We have some resistance at 1838 then 1849.
The banks helped last week as we had really nice action there to start the year.
BAC showed relative strength and triggered again above $15.75ish on 1/2 and had nice follow through Friday for a great two-day move. It’s a bit extended now so trim and trail based on your time frame, but we could see higher prices.
C played catch-up on Friday and gave us a nice set-up through $52.50ish, now the next obstacle is $53.50-53.70. This macro pattern looks good for follow-through at some point.
MS looks good as a well. If the banks get more attention then $32.75ish would be the next buyable area for momentum.
GS continues to hold the 8-day and could see $180+ soon in my opinion.
JPM had another settlement with some choppy action as it continues to ride the 8-day higher.
High Beta Tech had a very choppy mixed week.
AAPL lost momentum when it broke its CHL gap at $562ish on 12/27 (a tactical spot to use as a stop). If you didn’t use that area, Friday you could have used $552ish. Today it’s downgraded and lower below the 50-day at $540. The uptrend is under pressure from the 2013 Summer low. If $528ish doesn’t hold or a we don’t get a reversal today then $515 is the next spot. If you honored stops, this weakness could be an opportunity.
GOOG was upgraded by MS but needs to hold $1104 otherwise $1090 could happen quick. It’s been holding the 8-day and holding up better than other high beta names for now.
AMZN has been getting choppy. Some could look for a tactical short if it trades below $396.22, then you have another level at $391.
NFLX has been weakening a bit after a massive 2013. It’s now below the 8- and 21-day. If it gets below $359 it could see $351 pretty quickly, in my opinion.
PCLN has seen a quiet 60 point correction but now is a bit oversold. Use $1131 as your tactical pivot.
BIDU got hit Friday and is a bit hard to deal with. Some are saying it’s a double top. Use $171 as a stop if you are tactical.
Social media status:
TWTR was downgraded by MS. This stock has turned into a great trading vehicle. See if it can hold $65ish for a higher low.
FB hasn’t really recovered since that drop from 12/27. It put in a recent low at $53.43, and that’s the spot it needs to do some work above otherwise some more pressure could come in.
YELP is trying to build a new pattern. Use $66 as pivot support and $70ish as your action area if it wants to get back in gear to the upside.
LNKD has been in a corrective phase after a massive two-year move. It’s struggling to hold its 200-day, use $207.42 as your pivot both ways.
TSLA’s pattern is getting tighter. It needs to break above $152.50 with volume to get some upside attention. Below $146 and it could be pressured.
SCTY was upgraded by GS. It’s back near 2013 highs of $65ish. See if it can hold the gap and then power through that at some point.
3-D printing names were great last year.
DDD and SSYS led the way to new highs from Off the charts in the recent months. They don’t really have a set up here.
VJET was highlighted on the VTF with a great entry at $40.75ish. Keep this on the radar as it’s trading better.
XONE came back to life as well with a powerful move over $63. It is a bit extended now though.
ONVO is a very speculative 3-D biotech name but can also be a great fast-moving trading vehicle. Some rest above $10.17 would be good for more upside.
Metals held the upside from the first few days. I’m not very interested, but GLD could continue up to $121.64 then perhaps $125ish. It will need to hold above $118ish for that to transpire.
Airlines had a big session on Friday, see if there’s some continuation.
This week should be an interesting one as POMO starts again, the bigger guys might be back from holiday vacations and we will see if new flows can negate the profit-takers. I would be a bit surprised if we take out S&P 1813 before we take out the 2013 high of 1849, but I will stay quick on my feet and tactical.
Disclosure: Scott Redler is long BAC, C, JBLU. Short SPY.