The futures are pointing to a slightly lower open this morning despite another round of strong earnings as the dollar is up 0.3% against competing currencies. Comcast Corp (CMCSA), The Procter & Gamble Company (PG), Aflac Incorporated (AFL), Broadcom (BRCM) and Whirlpool (WHR) all beat bottom line analyst estimates while Sprint Nextel Corp (S) and The Southern Company (SO) fell short. With cross currents between the dollar and earnings, we don’t expect a day of fireworks in either direction. Economic data could be a catalyst, with durable good orders and new home sales numbers on tap at 8:30am and 10am, respectively. *Note: Durable goods came in at 3.3% vs. 1.8%, the biggest jump since January on the heels of a 1.0% decline last month.
Overall, it feels like this market wants to rest ahead of two potentially game-changing events: the November Fed announcement, which could bring QE2, and the mid-term elections, which could see a Republican wave spark years of gridlock in Congress. Each day we have seen very stock specific action; not even sectors are trading together at this point. There is a “have’s” and “have not’s” phenomenon occuring that we have seen several times over the course of this rally. The financials as a group are fairly weak, but Goldman Sachs Group Inc. (GS) has held up reasonably well while Bank of America Corp (BAC) has dropped to its lowest levels in more than a year as fraudclosure deepens. In tech, stocks take turns making big moves. Yesterday it was Netflix Inc. (BIDU), Baidu, Inc. (BIDU) and others, and today it could be Apple Inc (AAPL) and Amazon.com, Inc (AMZN).
When medium-term direction becomes clouded, many active traders look to shrink their time horizon and expectations for trades. Scott is stalking several momentum type ideas. Apple Inc (AAPL) took a break from the tech bonanza yesterday, and is on top of the list for a move intraday today. Apple (AAPL) has been consolidating since earnings, creating a nice tradeable wedge. Scott is in tier one from 307 and will add through 309.50-310 with big volume. A daily close above 310 should ignite a move back to first stop 315, and then 319, with a new eventual move to the new measured move of 340.
MakeMyTrip Limited (MMYT) has been a very successful IPO this year. MakeMyTrip Limited is an online travel company in fast-growing BRIC country India. The ‘Priceline of India’ has nearly doubled since its IPO and consolidated nicely. Momentum traders will be watching it closely today. Scott is tier one long and will add above 40.50. If it closes above this level we should see some new highs.
VirnetX Holding Corp (VHC) has traded very well as traders have bought, sold and shorted it many times. Right now it has a nice upper level consolidation. Scott will go after it above 18 for a momentum move. If it closes above this level we should see this in the upper 20’s. The company could have some big settlements coming, according to recent speculation.
SMART Technologies Inc (SMT) is the company that makes SMART boards for school classrooms and other purposes. The company had its IPO in July, and traded in a steady downtrend before now bouncing back. It has a nice pattern and could see a momentum move through $14.
Keep your trading very selective and tight right now, as trying to outhink yourself has led to trouble. Don’t trade laggards at this point like Bank of America Corp (BAC) or MGM Resorts International (MGM), you will only end up getting your heart broken. This rally has been long and fierce, and deserves a rest. We can’t wake the beast, but will be on our toes for when it’s up and at ’em.
