The S&P has been hovering between 1172-1197 over the past two weeks, showing indecision and putting in a solid upper range ahead of two important events: the mid-term elections and the Fed QE2 announcement. Right now, if you are an active trader, it pays to be a sniper; be very selective and don’t look for a lot of follow-through from leading stocks that have seen big runs. Things could break to either direction out of this consolidation, even a decent correction would be healthy for investors and traders.
Apple Inc. (Nasdaq:AAPL) has been an example of an exhausted leader that has been frustrating if you try to trade it each day. It was extremely strong into earnings, traded lower despite beating estimates, but bounced back well. It has been extremely choppy this weekm and could certainly go either way. Watch how it handles yesterday’s low of 390, and if it doesn’t even test that level and turns up (makes a higher low) it could be a nice buy.
Baidu, Inc. (Nasdaq:BIDU) is another tech leader we love, but it is tricky on this post-earnings island. Watch the floor of 110.60, if that level breaks it could run down to 108. Longer-term this will continue to be one of our go-to stocks, but it could use some time to rest and digest. I will stay away from it today.
Amazon.com, Inc. (Nasdaq:AMZN) chart looks a lot like aapl, but it is opening below yesterday’s low. Watch the previous resistance level at 165 for support. If it gets strong and trades above yesterday’s high, it could be worth a look. It’s another one that I like, but am not going to trade today.
Netflix Inc. (Nasdaq:NFLX) has laughed in the face of all its naysayers who claim it is just a movie rental company that carries the same risks as other entertainment industry names who have fallen by the wasteside. Netflix Inc. is a leading the media revolution and has proven its ability to stay ahead of the curve. The stock jumped nearly 10% after another strong earnings report and held the gap. If it can show some strength, we will trade it, but it could definitely filter back into the 170 area very easily.
Riverbed Technology, Inc. (Nasdaq:RVBD) had a little 80-20 reversal after a strong move on earnings, I will see how it acts it acts early. I will not be quick to short it, but to see if it can find a short-term floor to trade against. Riverbed Technologies, Inc. is an emerging leader in the cloud race.
Power-One, Inc (Nasdaq:PWER) is back above recent highs after handily beating earnings estimates, trading at its highest level since 2004. The weekly options strategy we outlined yesterday worked out great; these types of plays with weekly options provide minimal risk for this potentially huge trades. It didn’t feel like gambling, and we got paid.
Goldman Sachs Group, Inc. (NYSE:GS) broke out again yesterday, and continues to be a beacon of light in the financials. Without heavy exposure to the fraudclosure situation, GS has been able to really separate itself from the pack. If you want to own a financial, this is clearly the one to have, and perhaps it is seeing retail money come in that has recently been pulled from names like Bank of America Corp (NYSE:BAC).
SPDR Gold Trust (NYSE:GLD) has put in a two-week tight consolidation after the China interest rate raise gap down, but this morning is set to open just at the top of that range. It is another asset that could be waiting for more definitive word on QE2. Going forward, this is something we want to own amid growing global currency tensions.
Las Vegas Sands Corp. (NYSE:LVS) was a monster on earnings, and has been one of the strongest stocks in the market the last 2 years. It felt extended in the 30s, but as long as a stock continues to act strong you can get involved. Yesterday it couldn’t hold its earnings gap, and we will wait for some sort of base before chasing or fading Las Vegas Sands (LVS).
Rare earth stocks Molycorp, Inc. (NYSE:MCP) and Rare Earth Resources Ltd. (AMEX:REE) had a flush yesterday, engulfing the previous day’s breakout. The Rare Earth ETF REMX also had a tough first day of life, as it traded down around 5%. If you want to trade these, just follow Mike Lee and Steve Levay, they have been killing it with the Rare Earth stocks.
The Rally over the past two months has been outstanding, and there was no reason to fight the trend. The Fed telegraphed the next move in the market following the retreat in Jackon Hole in late August, and their put made it the low risk play to buy leading stocks. Last week we though we saw a day to take notice, but the snap back the following day put us right back in buy mode. The market is not invincible, and we certainly have problems in our economy, but you don’t fight the trend in the market if you want to make money. It was a good month for many, but dont get ahead of yourself. It is common for traders to have losing months after a big winner, because you get over confident and abandon your discipline and rules. Don’t let that be you. Stay light into the Fed and election or hedge your investments, and we will reassess the landscape after those events.
Here was last night’s appearance on CNBC Asia.
