Morning Call: Pick Stocks during Earnings Season
Futures have been quiet, but are off just a bit. Some digestion makes sense after the size of Friday’s gains. On Thursday, markets briefly broke below $SPX 1330-1333, but closed above it, relieving some pressure for a slight outside day. (NYSE:JPM) and the banks helped fuel a Friday rally after one of the longest losing streaks of the year. The ascending channel that this market has been surfing remains intact, as both boundaries prove to keep the pattern intact. These “outside days” give traders tactical spots to switch gears from short to long or long to short at either end of the range.
Big Ben speaks in front of Congress for the next two days, and earnings season gets moving at a faster pace. If you are in the office, make sure to know what’s reporting and when (we have a calendar on our site). Also, keep the levels (and Fibs) handy, as trading against those seems to be working much better than the news flow and current analyst recommendations. For example, Visa and Mastercard were both downgraded last week Hmmm!
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Most Bears with a thesis would have thought that we would be at yearly lows in the markets given the current news flow that we’ve been seeing out of Europe, combined with Chinese indices making 3 year lows, but U.S equities have been very resilient. That’s why you shouldn’t over think!
Support for the (NYSEARCA:SPY) stands at $134.85-$135.25 Holding this area would keep some shorts trapped and bullish pent up momentum intact. $134.10-$134.25 is Micro Support #2. Resistance is at $135.89 then $136.23. Bigger resistance stands at $137.51.
Banks help to lead the rally on Friday. (NYSE:JPM) reclaimed most of its moving averages and has a bit of a lower pivot range below the “News Gap.” The stock has room back to $37.50-$38 before that action area comes into play. WFC is the best in breed for banks. This will probably be the first major bank to make new highs on the year. (NYSE:STI), (NYSE:USB), and (NYSE:BBT) all have good looking charts.
High beta tech
(NASDAQ:AAPL) is still the best in breed. The stock retested the prior breakout level around $590 and has a big cup and handle type pattern. Micro resistance stands at $607-$608 then bigger resistance comes into play around $620. Earnings are next Tuesday the 24th.
(NASDAQ:AMZN) broke it’s ascending channel and is an avoid till earnings
(NASDAQ:NFLX) stock has been back in play after igniting above $70.50. It wasn’t ready to go again Friday.$86.25 is the next action area with stops at $82.50.
(NASDAQ:GOOG) is not a great stock this year as they missed earnings twice. This report will be VERY important. Big macro support stands at $555ish.
(NASDAQ:LNKD) saw a decent bounce back after the news that FB was entering their sweet spot. The stock is choppy, but I do think those with risk tolerance and a long term horizon can stay with this one.
(NASDAQ:FB) is not acting great but is still holding higher. If you are not committed, use $30.25 as a stop. The stock can see $28.10-$28.50, if we close below this upper range. There are lots of skeptics about earnings and lock ups. Know your time horizon here.
(NASDAQ:EBAY) has weakened a bit latterly. It should never have broken $41.50-$41.75, that was your intermediate stop.
The Ags continue to hold up well. The whole group had a spirit move in the last month.
(NYSE:CF) gets it back in motion above $198ish.
(NYSE:AGU) has a similar chart pattern as it hovers near old highs.
(NYSE:MON) has been talked about many times here as the best in breed and continues to act well with high corn prices.
(NYSE:MOS) is not a leader, but as a tactical trade it continues to hold steady
Quick Hits
(NASDAQ:SBUX) has a big floor in at $51 to trade trade against. It looks good for a new entry if you sold well.
(NASDAQ:DNKN) made new IPO highs a few weeks back and consolidated nicely. I still think you can throw this is in the drawer for a macro move in years to come.
(NYSE:MCD) was a nice trade for those looking for a move though $90. Lots of guys are concerned about their earnings, so this is not a compelling spot right now.
Gold/(NYSEARCA:GLD) has shown nothing new. $148.50 still intact.
Oil has been acting better coming off lows.
(NYSE:WMT) continues to act great.
(NYSE:TGT) played catch up well. I talked about Bullish Call strategy on Bloomberg a week and half ago, and the stock exploded. You can pick stocks in this tape.
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*DISCLOSURES: Scott Redler is long FB, NFLX, SPY puts.
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