The market is drifted lower early but is back to flat in Thursday’s session after returning to highs with a vengeance Tuesday. In the headlines, formerly peaceful protests in Egypt have turned violent over the last two days between pro and anti-government groups, while jobless claims came in this morning marginally lower than expected ahead of the big reports tomorrow.
The S&P probed support near 1292-1294 to test the mettle of this market, and stocks once again passed with flying colors, maintaining bullish short-term composure as we consolidate the latest up move. Gold also held support around GLD $129.25 and is now busting out of the low level base of the last two weeks after comments from Fed Chairman Bernanke that there could eventually be a QE3.
LVS Acting Strong Into Earnings
We have been mentioning the casinos for a few days now ahead of earnings for Las Vegas Sands Corp. (LVS), which could serve as the barometer for the group after some recent bullish gaming data from Macau. The gambling mecca of the Orient has seen staggering growth in the last year, and in January revenues grew 33% from the year ago period to $2.3 billion.
LVS has been acting strong recently, bouncing 13% since last week off support above $44. The stocks is nearing recent pivot highs at $51 (the upper trendline of the multi-month wedge pattern) as it looks like investors are expecting a strong report. Earnings are after the close today.
Apple Forming Wedge
Apple Inc. (AAPL) has been a manic stock since Steve Jobs left the helm, and that continued today. AAPL had a quick, sharp move lower into $338-339 support, but rebounded to make another higher low in the current short-term wedge formation. The stock still looks poised to take out highs in the coming weeks, and is a strong long-term value and growth story.
F5 Networks Enters Gap
The cloud computing sector has been quiet today, but that has not been the case for beaten down F5 Networks, Inc. (FFIV), which was the play of the day this morning from Evan Lazarus of T3Live.com. The stock has been basing in a low level consolidation following its mediocre earnings report more than two weeks ago. The stock surged near the top end of that range yesterday, and has broken into the gap with some ferocity this morning. The gap fill would take the stock all the way back above $135, but Lazarus says you should look to take some off in the $125 area.
Ford Putting it in Reverse
Ford Motor Company (F) dropped 20% off 52-week highs over the last two weeks after announcing mass recalls, but today is reversing despite another announced recall of F-150 trucks. When a stock continues to get beaten down day after day, you can often look for a calculated risk-reward trade in the form of a reversal, says Scott Redler of T3Live.com. Redler’s “RedDog Reversal” strategy involves buying a beaten down (or selling a parabolic) stock as it trades back through the previous day’s low (or high).
In Ford’s case, the stock dropped through yesterday’s low of $15.30 this morning, found a bottom at $15.10 and traded back up through the $15.30 level. You can enter on that break back up through $15.30 with a firm stop at the new low of $15.10. After such a steep drop, you have the potential for significant gains while having a tight stop from your entry price.
*DISCLOSURE: Scott has no positions. Evan is short AAPL.
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