Which Way Will Big Ben Move Markets?
European markets slipped a bit while Japan rips to another high of the year. Japan is now up an incredible 50%+ since November. US stock futures are 1-3 handles as we made another record high yesterday. Fed Chairman Ben Bernanke takes center stage today as the event kicks off at 10:00 AM ET. Will he revert to his natural dovish self, or will the conversation shift more towards tapering?
At this point the market continues to stair step higher, and there is no reason to fight the trend. The bulls have passed every test at each major pivot so far in 2013. Each pivot on the S&P (1474, 1530, 1574, 1597, 1636, 1653) required the bulls and bears to make some adjustments. Recently, the market hasn’t closed below a prior day’s low since the May 3 jobs number, which again is hugely impressive. Let’s stay the course until that tidbit changes. Currently, the S&P upper range has micro support at 1662 and the 8-day at 1653. Pivot resistance lies at 1674.
Tech continues to be mixed as opportunities present themselves each day.
Google (NASDAQ:GOOG), which has been best in breed, is trying to create another flag-type pattern. Yesterday it held its 8-day MA and you can now use $897 as a level to trade against. The longer it stays above that, the higher the probability we could get an add-on trade above $912 then $920.60.
Netflix (NASDAQ:NFLX) is also resting after a monster move this year. Recently it gave us two more trades at $210.50 and $219.50ish, now its hovering above its 8-day MA that stands at $233.42. If it can continue to digest, the next upside trade could be $241ish then $248.58.
Amazon (NASDAQ:AMZN) seems to have one of the best set-ups right now as it’s been in a channel for almost five months now. If they want to come after this, the buyable spot it needs to clear on volume is around $272-275. A close above it would be best.
Apple (NASDAQ:AAPL) was very erratic yesterday as Tim Cook did a good job handling the questions from Congress regarding taxes. Many thought this was perhaps Cook’s moment where he stepped out of Steve Jobs’ shadow a bit, but it won’t necessarily mean anything for the stock. For this to get more interesting AAPL needs to get and stay above $445.80. Holding $430ish would be constructive in the meantime. A close below that level and shorter term guys will lose interest.
eBay (NASDAQ:EBAY) got rejected at resistance after a nice post-earnings bounce. Perhaps the 50-day around $54ish could be buyable.
Yahoo! (NASDAQ:YHOO) has been a great 2013 vehicle and met most of our targets already. But that doesn’t mean it can’t go higher now. YHOO continues to hold up well, if you’re in it, make sure it stays above the 8- and 21-day moving averages.
LinkedIn (NASDAQ:LNKD) has been more of a micro trade as it’s been digesting a huge run over the last year. It’s been in the penalty box, though, since last quarter’s earnings. As long as it stays above $178ish, shorter term guys could stay interested, but overall it’s been a bit choppy.
Facebook (NASDAQ:FB) has been very weak and I haven’t really traded it since it failed after last quarter’s earnings around $28ish. For those holding it longer-term, the $25 level is an important area.
Zynga (NASDAQ:ZNGA) has seen some volume spikes, but needs to clear $3.60ish and hold above to get better action.
Priceline (NASDAQ:PCLN) had a monster move then got upgraded two days back and yesterday was an ugly candle. Some might look for a continuation short below $824. Use that as a pivot. It’s a tricky stock.
In the Morning Call we will go over some retail that have been strong. Saks is in the news for a potential buy-out.
Lowe’s’ (NYSE:LOW) numbers were a bit off, let’s see how it handles the report. WMT has been out of play but has held okay since its earnings. TGT had a nice break out yesterday.
TJX Companies (NYSE:TJX) has been trading in an upper range and looks poised for a potential breakout at $51.83 level. TJX has been the best-in-breed in the retail group. It has provided multiple additional entries since the rally resumed in November last year. Above $51.83 could be the next entry.ROST has been consolidating at highs for more than a month. It saw a nice move up into the resistance at $66.50 yesterday. It needs to stay above that level to extend.
JC Penney (NYSE:JCP) is one of those laggard stocks that has started to act a bit better. It has improved its composure since reclaiming the 100-day moving average with a nice gap up on May 13. Above $19.50 it could see some momentum. This is a laggard play with a decent set-up.
Dollar General (NYSE:DG) has been grinding higher above its 21-day moving average since it started to get back in motion in February. It has cleared some resistance levels and could get more upside.
Lululemon (NASDAQ:LULU) tried to clear $82 yesterday, let’s see if it tries again today. The pattern looks constructive.
Although I think the banks have higher prices in their future we outlined most of them early last week with nice set-ups. Now they are extended.
Goldman Sachs (NYSE:GS) was our focus for additional entries and $151 was great. Now it’s at $160+ and hard to chase up here. Perhaps use $161.73 as a pivot for active cash flow.
JP Morgan (NYSE:JPM) has shown relative strength recently since word started to spread that Jamie Dimon was almost certainly not going anywhere. The time to buy, though, was around $50, and then at previous highs of $51. Up here at $53.50+ I would not chase. The $53.67 level is the pivot resistance now.
Bank of America (NYSE:BAC) gave us a few more entries, the best one being recently at $12.41. Now it’s just trim and trail as I think it could see $15-16+.
Morgan Stanley (NYSE:MS) played catch-up quickly as that gap on May 3 ignited better action there.
Homebuilders have been leading most of the year. One of my theses Jim Cramer highlighted in his Mad Money program in January 2012 was the The Homebuilders ETF (NYSE:HGX).
Toll Brothers (NYSE:TOL) came out with good numbers today and now needs to get and stay above $37.50 for it to get more momentum. See if it holds up or if they sell it.
The solar group is a bit exhausted. Some traders caught cute shorts there yesterday as many of the solars had outside days. They could use a rest now, so map out the 8- and 21-day to see what type of rest takes place.
Tesla Motors Inc (NASDAQ:TSLA) is digesting monster gains with five controlled down days. Use yesterday’s low of $85.28 to trade against. It needs to get and stay above $90ish to get momentum guys a bit more interested.
Metals are trying to defend a potential double bottom.
Gold (NYSE:GLD) held $130.50 and then in yesterday’s down open, they held where they had to. This group still has a lot to prove, though. If today’s gap up holds, then $135.26 is pivot resistance.
At this point I think even the Bulls would like some type of corrective activity. We’ve come a long way, but until we get a close below a prior’s day low, continue to follow the trend and rotate through long set-ups.
Red Dog 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 Redler is long JAZZ, AAPL, ZNGA, INTC, BAC. Short SPY.