On Thursday the market had a breakout failure above 1150, but then held in pretty well on Friday. Still, if you look under the hood there is some engine trouble right now. Leading stocks all were hit Friday with continuation from Thursday’s failure. Chasers of the recent up-move definitely feel a bit uncomfortable, but cash flow traders made good money shorting these high beta tech stocks as they had nice topping set ups with stocks like BIDU 7%. Some money rotated into the oil space, and we targeted oil plays like OIH, RIG, BP, EOG, and DO. Then on Friday we saw money start to at least trickle into the financials.
You still need the proper entries and exits to stay profitable in this market. The upper inside range is 1132-1150 with a bigger range of 1125-1158. Market would be very strong if it continues to hold the 1125-1130 area, but could test the 200 day at some point if it wants to.
Tech. Shaking the tree here.
AAPL was a nice cash flow short through 291 and now is working its way to test key support. I would look to BUY this stock if we see right set up around 271-275 if we get the chance. First it has to get below the mini flash crash low of 275-279.
BIDU was a great long for us from 87-88 and then again around 93 with a targeted short last week around 105. Friday it saw some nice downside follow-through. I think you can look to buy this around 92-93, and if market gets hit, a bit harder around 87-88.
AMZN broke the upper range on Friday and the first test will be the prior high of149-151. The tree can be shaken for a nice scoop around 145-147.50, however.
GOOG is trying to hold upper range, but is choppy and I will avoid it until there is more clarity.
NFLX, guys scored big who took home NFLX short Thursday and stayed for day two short. I would cover and now look to nibble around 149-151 as this could be important level to hold.
VMW broke it’s ascending channel as we pointed out the action has been choppy here- ever since that bearish Barron’s article. If it breaks 84.50 it could test 81-82.
CRM also showed relative weakness in the last market upmove. It broke 116 and now maybe you can nibble vs. Friday’s low of 110, but it can also see 109 area before bouncing.
RIMM was a nice trade for us at 49-49.50, and could be decent for a trade today above Friday’s high of 40.46 for a move to 53-55 this week.
Oil. Money moved into oil last week, but they all had their 3 day moves.
BP was a great trade from 38.50 to 42 now it needs to re-set up.
RIG had a great move from 61 to 65, but needs time now.
EOG played some catch up and also isn’t as juicy here.
The moral of the story here is that you need to follow the rotating money to be consistent in this market.
Banks. Got a little attention on Friday, I’m not sure if it continues.
GS was a bit stronger Friday than last few weeks. If money rotates here it can trade through 148.50 for a move back above 150 (I’m not convinced though).
JPM decent Article in Barron’s, worth a look thru 39.10 for a scalp long.
BAC has a small descending channel that is worth a try around 13.30-13.40, but always be careful with laggard plays.
Two weeks ago we sent note that Gold break out would be buyable with GLD through 123.50-124, and it hit 129 Friday. I would take that cash flow trade off the table and still stay long, but in lighter size.