World markets were quiet over the weekend with most slightly in positive territory this morning. The Barron’s cover story was bullish on Europe, which is a bit of contrarian stance. China, which been weak of late, is up small too as its finance minister told news wires that his nation’s economy is not headed for a hard landing. I do think most of the pain is behind us in China. In Japan, the Abe coalition won an absolute majority in the upper house. The Nikkei has had a huge eight-week snap-back and is up only small this morning, so I think this political outcome was being priced-in.
The S&P closed at all-time highs Friday, continuing the “pain trade” for those have been betting against this market. The most recent inflection point came on July 11th when Bernanke’s dovish comments ignited the tape once again. Since then that gap never got violated and the market has been a grinding upward since. The last obstacle was 1687, which we closed above last week. The S&P is about a year and a half ahead of my schedule.
Now let’s see if the S&P can build a floor above that 1687 level and then punch through 1700. I’ve talked about the “Road to 1700” many times in the past few years and tried battle the fear mongers that have kept the public out of equities. PIMCO co-founder Bill Gross, a smart guy who I have respect for, famously said on July 31, 2012 that “stocks are dead” and investors should re-think age-old strategies. If stocks are dead, we are certainly living quite a zombie apocalypse. Meanwhile, Gross is out today saying he expects QE to continue through 2016. Hmm…
Metals are up again this morning as they continue higher from the June 27-28th bottom. Recently there have been some higher lows and some commitment to the bounce. Now Gold (NYSE:GLD) is filling another gap as it has resistance at $127-129. For Silver (NYSE:SLV) that $17.50-18.30 area proved good area to cover shorts and potentially flip long as it’s also up this morning on its way to back to the $20 zone (it’s lagging gold a bit).
We have another busy week of earnings (this the last really busy one). Tech has been the weakest with a lot of revenue misses. Money continues to rotate to keep the indices near highs.
Below is some commentary on stocks that are reporting Monday:
Before the open
Bank of Hawaii (NYSE:BOH) – The regional banks group has been showing some relative strength, with some stocks breaking out to new highs last week. The Bank of Hawaii is reporting before the open today with expected EPS of $0.83. The stock has a constructive chart with an upper level consolidation range in place that points to a potential breakout at $55.10.
Halliburton (NYSE:HAL) broke out of the mid-level consolidation range at the $45 action area that was listed on our Off The Charts newsletter on July 17 to put in a new high at $45.99 on Friday. The company is reporting before the open today with expected EPS of $0.72.
McDonald’s Corporation (NYSE:MCD) has been hanging in an intermediate wedge for the past three months since April 12’s pivot high. Recently, it’s been getting some selling pressure from the downtrend resistance from April. It’s hovering around key moving averages, and needs to hold above the recent base of $99 to keep its momentum intact. A move through $101.55 area could resolve this intermediate wedge to the upside. Expected EPS is $1.40.
After the close
Netflix, Inc. (NASDAQ:NFLX) has been the rock star of the market as it continued to hold its recent gain well. It saw some healthy digestion on Thursday and Friday, but is still well above its key short-term moving averages. The company is expected to report EPS of $0.39. I would be cautious going into this and lock in some gains if you are long.
Zion Bancorp (NASDAQ:ZION) is another regional bank that has been acting well, as it briefly broke out of the mid-level consolidation range on Friday. ZION is trading above all rising key moving averages with a strong, healthy chart. The bank’s expected EPS is $0.41. It has room for a move back to 52-week high at $31.40
Tech has been a mixed bag.
Google (NASDAQ:GOOG) missed on earnings but recouped much of its overnight losses. It now needs time to rebuild, let it do some work above Friday’s low of $875 before doing anything here. The $902.95 price point was Friday’s highs.
Amazon (NASDAQ:AMZN) still hangs in well, It’s also had a nice move since breaking above the $272 pivot and then 2013 highs of $285. Make sure you know the earnings date.
LinkedIn (NASDAQ:LNKD)is back near $200, showing impressive strength. Earnings will be key, as LNKD’s last report was mediocre.
Microsoft (NASDAQ:MSFT) was priced for a good report and was ugly. The support pivot is $31.02, but fast money will not be looking there for some time. There’s a big hole in that chart now, we need to see if there is any attempt to fill it.
Apple (NASDAQ:AAPL) has earnings tomorrow. I will discuss it tomorrow, but it got beat up Friday and remains a tough spot.
Salesforce (NYSE:CRM) is a bit of a laggard but has put in a mid-level flag and could continue higher if it clears $43ish.
3-D Systems (NYSE:DDD) has a nice set up here. It needs to $49.75 to potentially make a run at 2013 highs.
Tesla (NASDAQ:TSLA) had some volatility come in last week. It was a nice mover for those trading on smaller time-frames. It has a small inside range of $116-123 to trade against, so let’s see if we get a nice trade when it picks which way it wants to resolve.
Chinese internet stocks perked up last week. Names like BIDU, SOHU, SINA, QIHU, and DANG are worth watching.
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.