Stocks are a bit soft Monday as the oscillator hit pretty extreme overbought levels on Friday. This type of reading gives more active traders the opportunity to trade around positions to create some alpha in their accounts. Some forget that we’ve had a 100 handle move in the S&P 500 before Thursday’s QE-inspired move.
The S&P 500 peaked at 1474 and settled off the highs. Most indices produced some type of doji or hammer bar to give active traders a signal that some type of rest is due. Some traders will perhaps look like a "cute" short. Some upper level support stands at 1458-1462. If we above this it will create another high level flag, keeping shorts trapped and the speed of the rally fast.
Bigger support comes in around 1452, which represents the 50% area of last Thursday’s igniting bar. I would be a bit surprised if market goes much lower than this support area.
Major support sits at 1438-1442, which was prior resistance that should serve as major support. That area also is home to the 8-day moving average. Buying dips and staying with this move should be more profitable than just looking for cute short set-ups.
The action in leading high-beta stocks remain impressive. The four amigos (that you are probably sick of me talking about if you’re not in them) have acted very well.
Apple (AAPL) the stock took off in the last 30 minutes of the product announcement day and hasn’t stopped since. The $683-$687 area is now important support moving forward. A few weeks back I said it could see $700 during the week of the iPhone 5 release, and although it didn't happen last week, I expect it to be there soon.
Image via CrunchBase
Sales numbers have so far been outstanding, and I think as more of that news trickles in it will be the catalyst to get the stock through $700. Macro investors must stay long this stock. We have shared both long and short-term bullish views on Apple on T3Live over the past few years.
Google (GOOG) has also been moving well as its move since earnings has been powerful. The stock gave multiple set-ups for entries. The last one was last week, as it tested the 21-day moving average around $681. I’m a believer that at some point this year it challenges its historic highs of $747.
Amazon (AMZN) is one that I trade less often than AAPL and GOOG, but it is still grinding higher.
LinkedIn (LNKD) is starting to join that upper echelon of tech stocks. We talked about it many times as it repeatedly held upper levels. Three solid quarters of earnings seem to have given institutions some confidence to stay involved and trust it. It hit $125 last week, and I believe it is on its way to the $140 target that I slapped on it a few months back.
Facebook (FB) had a nice move off the lows. The stock changed complexion as it gapped up on September 5th and kept that gap intact. Mark Zuckerberg's influence over the last few weeks has been crucial. First, he announced he wouldn't be selling any more of his stock after his IPO lockup period expired, and then he gave a composed appearance at the TechCrunch Disrupt Conference. After that first pop, there was another nice entry was when it cleared $19.40ish. Now it’s on the way to test the gap from earnings. Resistance stands around $23-24.54.
eBay (EBAY) continues to be a slow go-to stock as it closed at the highs on Friday.
VMWare (VMW) and SalesForce (CRM) played catch up as we started listing them again last week. In our Off the Charts newsletter, we have highlighted a few cloud computing stocks that have come back into favor.
The retail sector has been a leader during this rally, and within the sector some of the big box, discount retailers have been strongest. Wal-Mart (NYSE:WMT), Costco (COST), Target (TGT) and Home Depot (HD) are the leaders I went over on CNBC Asia a few months back for macro investors to look at.
Momentum favorites Under Armour (UA) and Lululemon (LULU) played some catch up, as did the some beaten down high-end names like Tiffany's (TIF) and Coach (COH).
Banks had a tremendous move in the past week or so as central banking measures solidify the world economy.Goldman Sachs (GS) lead the way as it broke out on September 5th. The rest of the banks followed the day after. It could use a well deserved break, and the doji candlestick put in on Friday might lead to that rest. A move down to the $118 area would be healthy and buyable.
JP Morgan (JPM) started its move when it busted through $37.45. The London Whale gap is now filled. Look at the two-day move on August 5th and 6th, there was a nice bottoming pattern there. That was also the day when they announced the news of the bigger than expected loss from the London Whale.
Bank of America (BAC) was a great catch-up play. The strategy from August on Bloomberg paid a lot of those who followed it, and a lot earlier than expected.
Wells Fargo (WFC) never flinched and is at highs of the year.
In the oil sector, Exxon (XOM) and Chevron (CVX) are leaders, while some catch-up plays are Pioneer Natural Resources (PXD), EOG Natural Resources (EOG), Anadarko Petroleum (APC) and Schlumberger (SLB).
Ags are also in the mix, the leaders being CF Industries (CF), Monsanto (MON) and Agrium (AGU). Mosaic (MOS) is playing some catch-up.
Gold (GLD) and Silver (SLV) made a huge run in anticipation of and then in response to QE3. August 20th and 21st were the days that these patterns ignited. SLV woke up first and is up almost $6 (22.5%) since. Everyone had multiple set-ups to buy, up here is tricky now. GLD went the day after Silver, and is now in the $170-$175 resistance zone. More people are starting to get bullish on these now, and they could definitely have more upside, but it's not prudent to initiate new positions here after such a big run.
Back in February during episode of his "Mad Money" program on CNBC; Jim Cramer shared my analysis that the S&P is headed higher. Here is the segment - Off the Charts: S&P 500 Headed Higher.
Also back in September on CNBC, I stated my belief that not only do I think we are headed higher this year, I think that by 2015 we can hit 1,700 in the S&P 500. Here is the segment - S&P 500 to Hit 1,700 by 2015
*DISCLOSURES: Scott Redler is long AAPL, MCP. Short GS, SPY.
