Microsoft (MSFT), IBM Lead Lead Blue Chips Higher

The S&P staged a last gasp rally to keep its record unblemished for the week, but the Dow was the big winner on Friday because of two big winners: Microsoft (MSFT) and International Business Machines (IBM). In fact, the Dow finished 0.76% higher despite only 13 of 30 companies in the index finishing higher on the day.

Excitement is resurgent in former tech leader Microsoft (MSFT) after a strong quarter. The stock climbed higher immediately following its earnings report last night, and investors continued to buy it up during today’s session. MSFT closed the day up 5.7%.

International Business Machines (IBM) followed a similar pattern at MSFT, even tho its percentage gain – at 4.4% – was slightly lower. These tech bellwethers had become afterthoughts for growth hungry tech and momentum investors, but appear to making a comeback. Warren Buffet made IBM his only tech investment stake in 2011, and perhaps IBM is on its way to fulfilling the promise the legendary investor sees in it.

The Nasdaq finished marginally lower Friday, which can be considered a moral victory following a dismal earnings report from Google (GOOG). The stock opened more than 7% lower this morning after missing EPS estimates by $1 ($9.50 vs $10.50), and investors were not excited about buying the dip today. GOOG continued to trade lower all-day, finishing down 8.4%.

The banks, once an ominous weight on the market, are now leading the charge. The strength in the sector comes despite some shaky numbers over the last two weeks. However, it appears the market was pricing in calamitous earnings for the financial sector, and the “not so bad” reports we have seen were enough to attract buyers at depressed levels. It will be very interesting to see next week if that strength can continue.

Now with Options Expiration out of the way today, the action could start to heat back up next week. There appear to be highly contrasting opinions in the market right now. Many believe we could on the precipice of a monster bull run, on the strength of a recovering US economy and subsiding fear in Europe, while others believe the herd is once again being lulled into a sense of complacency before the slaughter. We are technical analysts, so we will just be watching the price action and looking for the best risk-reward scenarios to put money to work based on the charts.

Disclosures: Scott Redler is long SPY, WMT, XLF, OIH, GOOG calls, VXX. Short DIA.

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About Scott Redler 367 Articles

Scott Redler is the Chief Strategic Officer of T3 Live. He develops all trading strategies for the service and acts as the face of T3 Live. Mr. Redler focuses on thorough preparation and discipline as a trader.

Mr. Redler has been trading equities for more than 10 years and has more recently received widespread recognition from the financial community for his insightful, pragmatic approach. He began his career as a broker and venture capitalist where he was able to facilitate relationships that led him into trading. Beginning his trading career at Broadway Trading in 1999, Mr. Redler moved on with Marc Sperling to Sperling Enterprises, LLC after establishing himself as one of the best young traders in the firm. As a manager at Sperling Enterprises, continued to trade actively while working closely with all traders in the firm to dramatically increase performance.

Mr. Redler has participated in more than 30 triathlons and one IronMan, exhibiting a work ethic that also defines his trading. His vast knowledge and meticulous attention to detail has led to regular appearances on CNBC, Fox Business, Bloomberg, and he is a regular contributor to Minyanville and Forbes’ Intelligent Investing blog. He has been quoted in the Wall Street Journal and Investor's Business Daily, among other publications.

Scott received a B.B.A. in Marketing/Finance from the State University of New York at Albany, graduating Magna Cum Laude from Albany's School of Business.

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