Market Sets Sights Back on Highs (AAPL, GOOG, LNKD)
For most of 2013, if the market ticked down and you blinked, you missed the entirety of the “pullback.” For the first time this year, there was finally a tradable short from Wednesday into Thursday morning. If you called in sick on Thursday, you missed the best opportunity this year to get a discount on stocks.
The S&P pulled in about 30 handles from the highs of the year, which stand around 1530. Friday the markets bounced probably a bit more than those hoping for lower prices would have wanted. World markets bounced back overnight led by a 2.4% move in Japan’s Nikkei. S&P futures are up six or seven handles pre-market, and we are safely back above the 8- and 21-day moving averages.
I would not rush to buy this up open. Instead I would prefer to let the market prove itself again and consolidate above these averages. If you covered on Thursday into the S&P’s intermediate support, you do have the luxury to potentially test some shorts on this open. A close above 1518-1520 will have those who continue to play the roll-up short game a bit concerned.
We do have Fed chairman Ben Bernanke speaking on Tuesday and Wednesday in front of Congress. His FOMC committee’s Fed minutes played a part in last week’s pullback. If he continues to strike a hawkish tone it could once again spook the markets a bit. The Apple Inc. (NASDAQ:AAPL) investor Day is Wednesday, and then the sequester comes into play on Friday.
Continue to have a select focus on the strongest names on pullbacks rather than spreading yourself thin. On Friday we talked about Google Inc (NASDAQ:GOOG) and LinkedIn (NASDAQ:LNKD) as compelling candidates to buy on the dip, and they acted pretty well during the bounce. Netflix (NASDAQ:NFLX) was a bit weaker on Friday after some negative analyst commentary, but see how it acts after falling near its 21-day on Friday.
The 3-D printing stocks have lost some of their luster, and will have to try to pick up the pieces again this morning after a weak earnings report from 3-D Systems (NYSE:DDD) before the open. Those expecting a blowout quarter will be disappointed as DDD’s growth rate decelerated a bit, which the stock can hardly afford at its current multiple. Despite a stock split going into effect today on DDD, the stock is down around 11% pre-market. Stratasys (NASDAQ:SSYS), which has been the weaker name in the sector up until today, is down around 6% on the DDD earnings news and set to open just below its 200-day moving average.
The fiscal cliff noise shook some individuals out of their macro plan late December, don’t let the sequester noise shake it up this time. Thursday morning I stated my belief that there is an 80% probability that 1530 will not be the highs of the year. I still believe in my road to S&P 1700 by 2015, but we all approach that road differently. There will many spots to switch some gears using a tier system, and we will be on top of it every day in our Virtual Trading Floor(R).
Scott 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, Scott 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, he maintained his status as a top trader in the industry while working closely with all traders in the firm to dramatically increase performance. Scott has participated in more than 30 triathlons and one IronMan triathlon, 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 and Bloomberg, and he has been quoted in the Wall Street Journal and Invest.
Scott is currently the Chief Strategic Officer of T3 Live and is a Registered Associated Person of T3 Trading Group, LLC.
*DISCLOSURES: Scott J. Redler is long BAC, GE, XHB, AAPL. Short SPY.