Futures Point to Lower Open After Yesterday’s Small Reversal

There are some red arrows around the world as some profit-takers come in after a spirited week-long rally. Yesterday our markets finally gave us a Red Dog Reversal pattern signaling to reduce some risk and perhaps get short around S&P 1823ish or SPY $182.40ish. This was after a similar pattern a week before marked the bottom close to S&P 1740ish.

Today S&P futures are down 8-9 handles and we do have some support at the 50-day zone of 1795-1805. I do think the potency of this week’s bounce could lead to a buyable dip for new 2014 highs. This does get questionable if we don’t hold 1770ish in coming sessions (but I feel we could hold above that).

Yesterday we listed the RDR pivot for a few sectors and they all had similar results – pushed above Tuesday’s high then back below it Wednesday. Now map out support #1 & support #2 for each.

Stocks that have continued to move well:

Twitter (TWTR) entered the earnings gap to register a 5.28% gain yesterday. The stock was listed on our Price Point Sheet with a buy price at $54.92. It has reached our first target of $57, where it meets some resistance from the 8-day EMA. Holding above yesterday’s low of $54.76 could keep its momentum intact.

Zynga (ZNGA) has been acting better after its earnings on 1/31. The stock got another boost on high volume to add another 3.7% to its recent gains. It closed above Monday’s pivot high, showing commitment. A move through $4.97 could bring in more buyers.

HomeAway (AWAY) had a nice move up yesterday as Marc Sperling was mentioning this stock on our VTF. The stock broke above its short-term resistance of $40.53 to surge almost 4%. It has room for a move up to $43.39 where it would re-test the current high.

Western Digital (WDC) broke out of the upper-level wedge pattern to trigger the listed buy price of $85.40 from our Off The Charts newsletter. Next pivot to watch is $87.15. A break above this could lead to additional upside momentum.

Stocks that showed strength recently and are hovering at highs.

Green Mountain Coffee (GMCR) saw great upside follow-through to put in a new high at $120.24 on Tuesday after a few days of rest after the big gap up from earnings. The stock held up well yesterday as it closed at highs. A break above $120.77 could lead to another round of a short squeeze. Current short interest is 25.76%.

Facebook (FB) is inching higher above its 8-day EMA. The stock has been acting well after the big gap up from earnings. The longer it stays above the 8-day EMA, the higher the probability it could see higher prices

Netflix (NFLX) is also digesting its recent gains well. The stock had a nice break out at $412 last Friday and has been flagging nicely at highs. Holding above $424.28 could lead to the breakout move higher.

Under Armour (UA) broke out of its bull flag on good volume on Friday to put in a new high at $110. The stock has been consolidating in a tight upper level range. A break above $110 could set it in motion for higher prices.

Some high beta stocks took a break yesterday, which is healthy.

Apple (AAPL) is digesting its recent gains well as the stock continued to hold higher. The longer it holds above $530ish to allow the 8- and 21-day EMA to play catch-up, the higher chances we could see a gap fill at $545.75.

Google (GOOG) put in an inside day to digest the new highs on Tuesday. This stock is still the best-in-breed. There is no real set-up for now, but dips have been buyable in this market leader. Wait for the next compelling set-up to get involved.

Tesla (TSLA) is flagging at highs above the Monday’s gap, showing commitment to its recent breakout to new highs. Active traders could use upper support at $190 to trade against.

Disclosure: No relevant positions

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