By: Elliot Turner
Yesterday I was very excited for the trading opportunity in anticipation of Apple earnings. Sure enough, not only were shares halted ahead of earnings, but then came an accounting change from Apple which clouded my ability to clearly assess the strength (or lack thereof) of the earnings report. I took a stab at scalping the QQQ’s short off of a top in Apple, but could not stick with the trade. I decided to take my small loss and put together a plan for today’s market.
Apple’s (AAPL) earnings report is one of the more talked about events on Wall Street; however, it just might be overshadowed by the several other news and earnings events this morning and due out over the coming week. U.S. Steel (X) reported a $1.86 loss per share, well below the anticipated $1.43 loss. X enjoyed a rapid ascent from it’s low of $33.25 in early November, to a high of $66.45 in January. As of now, the stock is indicating to open below Friday’s low of $54.30. Should that level hold as resistance on a bounce, I will look to establish a short position. If the stock just runs away from me on the short side, I will gladly pass on the trade and seek out other opportunities.
Today the U.K. reported what can be summed up as an awful GDP number–a mere 0.1%, instead of the expected 2% growth. The U.K GDP number coupled with S&P putting Japan on credit watch negative put immense pressure on the futures overnight. After yesterday’s action, we have a small two day base in many of the stocks we follow. Watch price action closely as we approach these levels. If prices hold, then we have a great level to establish long positions against; however, should the S&P takes out Friday’s low at around the 1,090 level, then watch out for intense selling pressure to come into the market.
Two stocks I will be watching for directional tells are Freeport McMoran (FCX) and Goldman Sachs (GS). These are two of the market’s leaders, whose earnings reports were big catalyst behind Thursday’s aggressive sell-off. For the better part of a day and a half, GS has been trading in a $4 range, from $154-158. A break of that range should presage the next move for the financials. With FCX, a move outside of yesterday’s range of 74.32-76.09 should offer a tell as to the direction of commodity stocks.
With a Fed Day tomorrow and Bernanke’s reconfirmation looming over the market, be cognizant of the newsflow and prepare for some volatility.
