Although traders largely sit on the sidelines during often-quirky options expirations, the market had a productive day Friday, trading back up into an important short-term level. Wednesday’s high in the S&P of 1321.35 will serve as a line in the sand for the bears if they want to maintain any degree of control over the proceedings. With the head-scratching action seen on OpEx, however, the importance of today’s close is somewhat negated. Monday’s open will be the most telling short-term sign.
Yesterday the bulls averted disaster buying pushing the market higher to close the morning gap down. After opening well below the 21-day moving average that had been acting as support, it looked as if what looked to be just a technical pull-back may amount to something more significant. The day and a half bounce puts everything back in flux as investors waffle in a sea of government uncertainty.
For more watch the T3live.com Weekly Recap with Evan Lazarus below.
This week, much like two weeks ago, saw the Chinese Internet stocks shine as one of consistently strongest pockets of the market. The trio of SINA Corporation (SINA), Sohu.com, Inc. (SOHU) and Baidu.com, Inc. (BIDU) showed varying degrees of relative strength when the market pulled in, hanging in upper bases. SINA has emerged as the strongest of the three, breaking out to new highs yesterday. Look for these stocks to continue to lead the market if it can catch a bid next week.
Another strong sector this week was the casinos, which were boosted by news that group laggard MGM Resorts International (MGM) will hold a majority stake in a new Macau joint venture that should give it more exposure to the booming gaming zone. Wynn Resorts, Limited (WYNN) and Las Vegas Sands Corp. (LVS) have been the two strongest casinos over the last two years, but it was MGM’s turn to boost the sector. To lump Wynn in a class with LVS is, however, disrespectful to Wynn, because it is far and away the leader of the casinos. WYNN broke out today from an upper base on good volume after setting up nicely over the past few weeks.
Perhaps the next sector to provide leadership if the market surges next week could be the apparel stocks. Under Armour, Inc. (UA) and Lululemon Athletica, inc. (LULU) are the go-to momentum stocks in the sector, but there is a new kid on the block (that is in fact not so new) that is making a name for itself in the stock market: Abercrombie & Fitch Co. (ANF). The hip young clothing brand jumped more than 11% last Tuesday after positive comments from the company’s first ever analyst day. The stock has built on those gains, continuing higher and building a nice upper level base that momentum breakout traders dream about. Watch all three next week as they could certainly pop out of those upper consolidations.
Chipotle Mexican Grill, Inc. (CMG) looks destined for higher prices after announcing a new restaurant inspired by Southeast Asian cuisine, aptly name ShopHouse. Investors seem to feel this new venture could be another big score for the wildly popular restaurant chain, and it has continued to extend to new highs this week.
Most of high beta tech was weak this week, which will have to change if the market is truly going to catch momentum to the upside. Apple Inc. (AAPL) is a sick puppy right now after index rebalancing, and today is poking its head below major support at the $330 level. The intraday low from March 16 of $326.26 will provide the last thread of support before the $320 area. Google Inc. (GOOG) was slammed after the bell yesterday following a mediocre earnings report. The company had already been weighed down by growing anti-trust scrutiny, and the poor report has Google down nearly 8% on the day. Amazon.com, Inc. (AMZN) has turned lower after showing promise of getting back to highs the last few weeks. Netflix, Inc. (NFLX) has showed renewed signs of life and is still above its moving averages, so it could be another place to turn to for momentum next week.
Finally, its impossible to ignore the shocking run of silver. The precious metal trapped more shorts over the last two days after showing signs that it might stage a brief pull-back. Thursday silver opened near all-time highs once again and blasted off, continuing its dizzying run overnight. The iShares Silver Trust ETF (SLV) has more than doubled since September 2010 and quadrupled since early 2009. At this point its hard to recommend a long or a short in SLV, but its worth noting its strength.
*DISCLOSURE: Evan is short AMZN
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