As we come back to work after the holiday shortened week, the wall of worry feels tall. Although we look poised for a free-spending holiday season based on results from this weekend, rising tensions in Korea and ongoing problems in Europe continue to give investors some pause. However, leading tech stocks all seem to have the muscle to keep powering higher in a calculated way if the market can hold up. That’s looking more and more like a big IF this morning.
The ranges in the indices are starting to tighten as we try and figure out if a move from S&P 1127 down to 1173 is enough of a correction. The new inside range of this mid-range wedge is 1178-1182 on the support side and 1188-1192 on the resistance side. Key support is 1173-1176 and key resistance around 1198-1202. After the futures were reeled in from overnight gains to morning losses, the action this session is continuing to put stocks under pressure. It’s time to see if we get some range resolution this week, and the early indications are that it could be to the downside. It’s been a struggle to hold the strongest stocks as it takes a strong set of nerves when you wake up and see the headline driven gap downs we’ve seen several times this year.
Tech
Amazon.com, Inc. (Nasdaq:AMZN) was the first high beta tech/retail stock to make new highs. I’d look to take profits here if you’re long.
Netflix, Inc. (Nasdaq:NFLX) I’ve taken home during each major gap down and the stock always buyable amid the morning emotion and is one of the first to go green. It’s above recent highs of 192 and should see 200+ at some point. It’s holding up relatively well this morning.
Apple Inc. (Nasdaq:AAPL) still looks good on a more macro basis, but is sluggish compared to the above two stocks and is getting hit this morning. I’ll continue to look for longs here if it can recover to push above Friday’s high. The market will need to cooperate on this one.
Baidu.com, Inc. (Nasdaq:BIDU) range is tight. I was long overnight was thinking we can add through 109.80-110.50 for a pop back into upper range, but I got flat this morning as the market is getting pressured. I will revisit this one according to my plan.
Riverbed Technology, Inc. (Nasdaq:RVBD) keeps going higher, but there is no set-up at this point.
F5 Networks, Inc. (Nasdaq:FFIV) we have targeted before, but now there is no set-up.
VMWare, Inc. (NYSE:VMW) acts better and has a nice set-up, it looks like 81.75-82.25 could be a cash flow buy for a move back to above 85 if the market cooperates.
SINA Corporation (Nasdaq:SINA) and Sohu.com Inc. (Nasdaq:SOHU) have tight upper ranges, but I’m not sure which way they will resolve. Stay tuned. SINA is showing strength this morning.
Research In Motion Limited (Nasdaq:RIMM) is taking back it’s 200-day and looks destined to go higher, although the morning weakness is raining on its parade.
Casinos
Wynn Resorts Limited (Nasdaq:WYNN) is hard to trade at this point. The chart looks off technically after the big dividend, but conventional wisdom says it should resume its climb after the special dividend.
Las Vegas Sands Corp (NYSE:LVS) is right smack in the center of its recent range after pulling in off the highs. We should get some resolution here soon and I’m leaning long. The 51-51.20 level is the new trigger buy.
Solar stocks had started to look poised for a bounce, but are under pressure a bit this morning.
First Solar, Inc. (Nasdaq:FSLR) is back in the bottom end of its range around 123 but could be a bounce candidate if it can hold this support level.
JinkoSolar (NYSE:JKS) was a great trade for us through $26.-$26.40 Wednesday, and although it has pulled in a bit this morning, still could be worth a look for one more long trade through Friday’s high of $27.45 if it gets back there.
Gold- I mentioned a potential head and shoulders being built that some might want to short around $1360ish, which could start the right shoulder. The neckline is around $1320.
Bank of Ireland (NYSE:IRE) has firmed up a bit after the bailout for Ireland was rubberstamped. In my Wednesday note I mentioned I was buying below 1.30, it was up 22% premarket. I sold half into this gap up, but it should be able to see $1.90-$2.25 pretty short-term.
Listen up for headlines since there are a lof of them that can impact the market these days. The most sensistive would be if North Korea fires on South Korea and that conflict escalates into a full-on war. The United States stand ready to intervene in such a scenario and a war could have broad implications. I do feel most of Europe is priced in for now, but fears of contagion are high in the Eurozone with Portugal next on the list. Also listen for resolution on the Bush tax cuts. Will they extend for everyone (could be good for market) or just $250,000 and below?
The market took out some minor support this morning and the inside wedge that has been created is now looking to be resolved lower. We are now below 1178-1182 and a 60-90 minute close below this area should give us a test to reactionary low of 1173-1176. d Daily close below the 1173-1176 level should, technically, ignite a move to the 1155 area which is the 38.2 retracement level of the move from 1040-1227.
I am not getting short at the lower end of this range, since that trade has been very tough, but I did clean up some longs early on. Tech is acting okay, but you just can’t chase up opens or extended stocks at this point. Banks seems be a bit stronger this morning with some talk that Wells Fargo & Company (NYSE:WFC) could give a dividend. I’m still steering clear for now. Make sure and look for the hourly close below or above levels to show “commitment” to the move.
*Disclosure: Long IRE
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