There are mixed markets around the world this morning as Europe is down small after a powerful 6-7 session rally. The Shanghai eases off two-months highs with a 0.76% loss while the Nikkei played catch-up with its best session of 2014 up 3.1% as the BOJ says it will extend its special lending program for another year.
S&P futures are down 1-2 handles after a “bungee cord” type bounce off a nice Red Dog Reversal at the 1740 area less then two weeks ago. The move was fast and furious leaving some with not enough risk on, or caught short, to create a bit of a pain trade. Last Thursday the bears had another chance but the re-test of the 50-day EMA around 1810 passed and the bulls kept the ball.
The Nasdaq powered to 2014 highs (actually 13-year highs). The S&P is now about 10 handles off 2014 highs as we are a bit overbought. A day or so of digestion would be nice before we make an attempt at 1850ish. The longer we hold above 1830ish the harder the bearish argument gets.
There has been lots of very specific stock action in the last week or so as stock selection has been key with earnings season winding down.
The Dow took its turn to lead the charge on Friday.
Exxon-Mobil (XOM) led the oil sector up with an almost 3% gain on Friday. The stock put in an engulfing bar to clear some short-term resistance. It has regained the support of most key moving averages. Next resistance level to watch sits at $96ish.
United Health (UNH) also led a strong move in the healthcare sector up with a 3.3% gain to break out of the descending channel that had been in place since mid-January. Some digestion above the 100-day at $72ish could keep its momentum intact.
Proctor & Gamble (PG) had a nice reversal to register 2% gain and retest its 200-day moving average. A break and close above $79.81 could add some power to its rally.
Tech continues to show a lot of divergences, so it’s important to identify relative strength on a day to day basis.
Tesla (TSLA) had a nice gap and go on last Monday to set a positive tone for the week as the stock continued to build a strong base above its 8-day EMA. It put in a new high on Thursday at $202.72 before taking a break. Holding above the 8-day could lead to potential new highs in the coming sessions.
Qualcomm (QCOM) had a nice rally to put in a new high at $76.75 on Thursday. It looks a bit extended on a short-term basis, but overall the trend has been up. Holding above the breakout level of $74.50 could keep its momentum intact.
Ciena (CIEN) had a nice gap and go on Friday to break above the monthly resistance of $24. The stock also closed on highs, signaling potential upside follow-through. Next resistance to watch stands at $26.20 from October’s gap.
Solars have been acting better again.
First Solar (FSLR) cleared its downtrend resistance that had been in place since November with a small bounce recently. The stock finally regained the support of its 100-day on Friday. It would be nice to see this solar name continue to build above $50-52 to form a rounding bottom that could potentially lead to a further bounce.
SolarCity (SCTY) has been building an upper level range. A break above $76.40 on good volume could lead to a potential new high above $79.86.
Canadian Solar (CSIQ) is also building an ascending triangle that could resolve to the upside with a break and close above $40.
Nike (NKE) retested its 200-day EMA on the recent pull-back, where it held and bounced off. The stock has seen a steady rally since then. A break and close above the 100-day at $75.50ish could bring in more buyers.
Gold (GLD) enjoyed another big gap up on Friday to get back above its 200-day, although it was overshadowed by Silver (SLV). Holding above this key moving average at $126.50ish could lead to higher prices moving forward.
Disclosure: Scott Redler is long ZNGA, BAC, GLD call spread.