Yesterday strong stocks held in well when the indices were under pressure, and then blasted off when the market rallied in the afternoon. After yesterday’s action, I felt like I could once again build a core position in a basket of tech stocks for the next leg higher, but once again the headlines have thrown us a curveball. Over the last two months the negative headlines had abated somewhat, allowing us to rally relentlessly, but today’s news about North Korea attacking a South Korean island has stoked fears of further escalation of the conflict between two nuclear nations.
Today, despite the down open, we will be looking at those stocks that closed on their highs to see if they can go green and hold. If none of these “go-to” stocks can go green, today could get a bit ugly. Here are several of the stocks I will be watching closely:
Apple Inc. (Nasdaq:AAPL) looked great yesterday and into the close. I thought it was ready to resume its leadership of this market, but its down with the futures this morning and let’s see if it can go positive today.
Netflix, Inc. (Nasdaq:NFLX) was a monster yesterday making new highs, but is also down with the futures. This should be one of the strong candidates to go green.
F5 Networks, Inc. (Nasdaq:FFIV) blasted off yesterday for new highs after we put it on the radar for a breakout trade. It’s another strong candidate to go green.
Riverbed Technology, Inc. (Nasdaq:RVBD) has been a monster but this one feels too extended to buy here. A stock like FFIV that is playing some catch-up is more attractive to me here.
salesforce.com, inc. (NYSE:CRM) has emerged as a leader after blasting off following its earnings report. While you could say its extended, it feels like one that will be strong for the foreseeable future.
Amazon.com, Inc. (Nasdaq:AMZN) was in the tech dog house after having two harsh down days during the correction, but has snapped back and is sniffing new highs once again.
Chipotle Mexican Grill (NYSE:CMG) is a play outside of tech that has a tech-looking chart. It’s an amazing story I’ve never seen one of their restaurants that isn’t full. It looks set to open at the breakout level from yesterday, and I expect it to show strength once more.
Las Vegas Sands Corp. (NYSE:LVS) was a monster into and after earnings, and gave a nice pull-in for those who wanted to own it at more of a discount. It has bounced back nicely, but for me right now it is once again to extended to be a priority.
Let’s see how the S&P handles yesterday’s low of around1184 area, and below that we have the recent pivot low of 1173 with the 50-day moving average at 1172. I feel that this could be a good opportunity to take advantage of a knee-jerk, headline driven dip in the futures. Obviously an escalation of the conflict between North and South Korea is not a positive thing, but I feel that for the most part investors have moved away from focusing on headlines and instead focused on valuations more strongly.
If you are coming into the day with multiple positions of the strong stocks from yesterday, perhaps nibble in the first 15 minutes on the lower prices and sell some if the market tries to go positive. If they hold green, then maybe we hold some to capture that follow through. I’m looking to salvage the trade here as I came in with several longs after yesterday’s action. If no stocks go positive, and in 30-60 minutes these stocks break morning lows, I will get out and live to fight another day.
*Disclosure: Long AAPL, SPY
