The Greek elections took place without a the “leave the Euro” outcome that was starting to look increasingly possible. Now it’s time for Greece to face reality by collecting some taxes and potentially selling some assets. It will be a long road that many still believe will result in a Euro exit after more failed bailouts.
European stocks initially popped on the news, but have pared a significant portion of gains as Spanish 10-year yields climb above 7% and Italian yields aren’t too far behind. Bottom line is, problems in Europe are far from over and we will have to navigate the ranges by picking spots with a bit of safety.
Most were expecting a huge gap down or gap up, so a flattish open is interesting to see. Last Monday the gap up was sold hard, so I think if you’re in the bullish equities camp, a few inside days would be best as we need to see if there is any commitment to this area.
IBD put the market back in a “Confirmed Uptrend” with the caveat that it usually fails in June/July. This tells me you can’t be a stubborn short but on the same token, you need to pick your stocks very wisely. Use a tier system, where you can take some trades and ride some. A distribution day in the next session or so will probably shake up some “uncommitted longs”.
G20 is still meeting and we have the Fed this week. I’m sure the market will be whipped around by the headlines.
The S&P is well off overnight highs and a bit weaker. The inverted Head and shoulders thesis gave us a great road map to navigate. 1333-1336 is an important level, and holding this level would be important for intermediate trend followers. This level was a nice pivot spot to trade against during the last week or so as it gave us an actionable area. If markets hold this area, pent up bullish momentum will stay intact. 1312-1314 is the spot that guys with more of a “long thesis” will like to see hold as it ‘s higher level that needs to be defended. 1306-1309 is the line in the sand, any close below this area and all long bets will be off as chorus will call for a test of the lows.
Resistance stands at 1343-1348, then a big spot at 1356-1360. Some stocks are breaking above lower pivots for cash flow trades, and some are not even worth your time. There is also a small group of stocks making 52 week highs. Figure out how you want to maneuver and what your time frame is.
High beta tech has been mixed.
Apple (AAPL) has been very quiet lately. Ever since the “outside day” on WWDC day, it’s been lagging. I’m not sure what to make of it yet, so next few sessions will be key. I think you can try and be long vs. $566-569, while a close below this area would not be bullish. If it were to get some big volume and reclaim the $577.50-579.50 area it could get some momentum back.
Amazon (AMZN) still hangs around but is not compelling.
Google (GOOG) is the weakest one, and has been a better short than long on every rally. $556 is recent pivot low. If it wants to rally a bit it has resistance at $572 then $583. There is a wall at the $596.
Baidu (BIDU) has been very weak/choppy. I’ve avoided.
Netflix (NFLX) has been a short since early February and it’s not very compelling. I guess you can trade vs. low of $60.70. Hard to be short this down here. I wouldn’t be “that” surprised if it has a countertrend move back to $77-79.
Microsoft (MSFT) has a nice bounce off the 200day, it was a great calculated long by Sperling a week or so back. It has some room to $30.40-30.80, I would take some profits there.
Intel (INTC) reclaimed most of its moving averages and can use a rest now. Take some off if you have been swinging it long.
Facebook (FB) was a great vehicle for us last week. The stock put in a Red Dog Reversal on June 6th as it made a new low at $25.52 and came back up thru the prior low of $25.75. The strategy was to buy $25.75 with a stop at that low ($0.25 risk) Some are still long from there. June 14 was a bit easier and quicker when it closed above $28.10. I chose that strategy with a bit more emphasis. Trailing a some but very light. $29.30 is my new trailing stop.
Zynga (ZNGA) finally had a push as it was upgraded by almost everyone now. Perhaps this time it can see $6-$6.36 and with a bit of excitement, $7.25.
Groupon (GRPN) was upgraded today and has some room back to $12ish.
Banks have been a decent trade off lows
JP Morgan (JPM) announced its $4.2 billion loss and that event was the short term low on June 5. It’s been working higher since. Better to buy on weakness, but has some room back to $36.27-36.50.
Goldman Sachs (GS) finally had a decent green day. I guess if market hangs around, it can see a feeble bounce back to $99.75ish. I guess a tactical entry is if it show’s relative strength and trades through $95.77.
Bank of America (BAC) is trying to come out of its wedge and can see $8.12 then $8.50.
MasterCard (MA) reclaimed some moving averages last week and next big resistance is $440ish.
Gold (GLD) is very choppy upsetting trade for most. It is trying to wedge here. It’s been caught in a downtrend since the high back in August. The move on February 29 added fuel to that down move. It will need to take out $159.20 with big, big volume for it to start acting better from a long point of view.
The Oil Service (OIH) and Energy (XLE) are coming off lows but not compelling.
Continue to be flexible and selective in this tape. If you have an objective approach with levels, you can still hit a single each day and occasionally steal second. Don’t swing for the fences.
I hope everyone had a great Father’s Day!
Disclosure: Scott Redler is long AAPL, FB, BAC.