Wednesday, August 14, 2013
It's been an interesting couple of days as the market continues to digest the slew of earnings and the constant Fed chatter about whether or not they will begin to taper the QE Bond purchases. The big story over the last two sessions has to be the nearly 8% move in Apple (Aapl) to the upside. Fueled by the story that famed investor and corporate activist Carl Icahn announced a significantly large position in the tech giant, the once favorite cult stock has regained some of its luster. On the heels of that news yesterday, Apple (Aapl) stock took-off and gathered steam as it crossed above the Daily 200 Day moving average (463.61) on a closing basis for the first time this year. Today's action pushed Apple above another important technical level the 50 Day Weekly moving average at 489.56 as well as briefly trading above the 500 mark for the first time since January. I'm not sure if people were chasing or covering shorts, but today's large gap up Doji could be a red flag in the short-term for the Bulls. I would not look to short the name because of all the momentum over the past three days, however, I would take some profits or sell at or near the money covered calls to take advantage of the huge option premiums. The levels to watch going forward are the 489.56 area as first support followed by the Daily 200 at 463.61 as pretty major support after the huge move to the upside. As far as resistance levels, today's high of 504.25 followed by 507.85 will serve as the first area of resistance followed by more overhead resistance area between 519.39-523.68.
The broader indexes have been stuck in a range for the better part of a month with the line in the sand for the Bulls resting at 1576.03 in the S&P 500. This consolidation has worked off the overbought condition that was in place when the SPX broke above 1700, so for now I see a range bound trade between 1576.03 to the downside and 1709.67 to the upside. It looks like the SPX is forming a H&S top or this sideways action is just a Bull-Flag getting ready to burst higher. With the summer coming to an end and many Hedge Fund managers returning from their vacations the next couple of weeks should be a telling one for who will control the back half of 2013. With the heavy hand of the Fed still controlling a lot of the action, I believe my gut will be wrong and the market heads higher once again until the Fed really does take off the training wheels on this market and the economy at large.
By Josh Kahan
Friday, August 9, 2013
Today marks the end of the first down week for the major indexes in almost two months. The S&P 500 broke above 1700 during last week only to fall below and close out the week at 1691. While the market is acting a bit tired, the flow of funds from the bond market and into stocks continues. Mr. Bernanke is still making it too painful to stay in cash, and the "Great Rotation" may or may not be unfolding. The levels to watch going into next week are, 1676-1680 to the downside and 1705-1709 to the upside. I look at the 1676-1680 area as a very important pivot point and one that the Bulls must defend otherwise a move to 1650 will ensue in short order. The SPX could also be forming a small Head and Shoulders pattern with the right shoulder needing conformation by a close below 1676. 1676 also corresponds with the 30 Day moving average that has been solid support for the Bulls for much of this rally.
The second chart is an interesting look at the inflows and outflows and how they tell the tale of the direction for the S&P 500. This chart seems to also illustrate the money coming out of the bond market and having to be put to work by the various large bond portfolio managers. Bond managers are just that and they are just trying to keep pace by buying the SPY and QQQ on every small dip. The next couple weeks should be a battle between those who have participated in a large portion of this huge 9 month rally and the "Great Rotation" money that is late to the game.
Stocks I'm putting on my radar for next week:
Potash Corp.(Pot) I would look to buy it around 29 with today's close just below 30 (29.93) if given the chance.
Intel Corp.(Intc) Looking for a swing trade if the stock tests the 200 Day at 21.74.
By Josh Kahan
Monday, August 5, 2013
After a silly last gasp rally on Friday, Baidu (BIDU) has reversed course and come down even faster than it went up. I was able to put on a short swing position on Friday at 138.10 and because we are still in a Bull market and greed kills it is time to take off 1/3 or 1/2 of the position if you have followed my idea. I would look to cover another 1/3 below 130 if given the chance and the balance between 125-127.
By Joshua Kahan
Thursday, August 1, 2013
Now that 1700 has come and gone in the S&P 500, the question is will today's gap be another head fake or the beginning of the next leg in this monster Bull rally? With the continued outflow of funds from the bond market, and The Federal Reserve's reluctance to take off the training wheels, this market seems like it will continue to confuse and confound professional money managers and investors. I know many people have gone broke fighting the Fed and while I am still in the skeptics camp I will not put on my Bear suit at this point. I will say that you can still make money on the Bearish side looking to short some of these overblown high-flyers on a technical basis with fast profits. In the next paragraph I will look at a stock that looks ripe for a pullback in the coming days. The levels to watch in the SPX going forward now that we broke above 1700 are, 1698.78 followed by 1689.42 as minor support. More major support should be found at last weeks low of 1676.03. With today's close being yet another All-Time high, I don't have any real resistance levels to talk about, however, another 2% higher or so somewhere around the mid to upper 1740s could be an area where this rally stalls out briefly again.
When I look at some of the big high-flyers I almost can't believe what I see. I spoke about Amazon (Amzn) a few weeks ago and the vertical nature of the move. Despite the overall market hitting new highs almost on a daily basis, Amazon is still below the level I suggested a short-side trade in. That trade worked well and has come and gone in my view. So, I am on to my next stock to short namely Baidu (Bidu). This company is often refereed to as the Chinese Google and while it may serve as a poor man's Google it is way overdone to the upside at this point in my view. With a daily RSI approaching 90 (87.37) I would look to short this into any move higher tomorrow. I believe just like Amazon and just like Netflix this stock will not stay vertical for much longer before falling back toward the 125 area. So, based on today's closing price of 134.93, I am looking for a blow off top and reversal back to the 125-127 level within a week. Since earnings have already come and gone, I would use a put spread or shorting the stock outright in the next day or so. This is another volatile name so this idea is for aggressive traders only.
By Joshua Kahan
Thursday, July 25, 2013
It looks like Amazon (Amzn) missed the street's numbers and the stock is trading down almost 10 dollars from today's close. I did see it trade all the way down to 286.01 right after the release only to climb back above 300 briefly before heading to 294 at the time I am writing this. It was a good trade and if you stayed short I would look to cover in the low 290s tomorrow morning.
I like Broadcom (Brcm) as a long candidate using today's low of 26.58 as a stop. I'm looking for a bounce back toward 30 in the short-term, but would not hesitate to sell it above 29 if given the chance.
By Joshua Kahan
Wednesday, July 24, 2013
As the market continues to digest the latest earnings rolling out from the likes of Apple (Aapl) to Caterpillar (Cat). The question is can the second half numbers possible live up to the first half performance we have seen so far. My opinion is no, however, as the fear of the Fed Tapering seems to be in the rear view mirror again it has hard to see what will bring this Bull market back to earth. With so much money being pulled out of the bond market plus The Fed still not willing to take the training wheels off, the volume-less rally will continue. With 1700 less than 2 handles away during today's session in the S&P 500, stocks reversed course and backed off a little over a third of one percent today. The levels to watch in the SPX are 1698.78 as small short -term resistance followed by 1671.84 and 1657.41 to the downside. I would need to see a break below 1677 before the market would start to look for another possible small correction.
So it looks like Apple (Aapl) still has some life in it after reporting what looked like a number that was more of a relief to those concerned the smartphone market was slowing rapidly. Today's 5.14% gain was it's best in over 8 months but the company stock price is still a far cry from the 705 high seen last year. The stock is again trading above the 50 day that now sits at 429.17. I still believe the stock needs to close above 450 on a couple of weeks to confirm the downtrend has been broken. On the heels of better than expected numbers out of Facebook (FB) and Qualcomm (Qcom) after the bell the march higher may continue in big cap tech. The levels to watch are 435.26 (Today's low) as the first area of support followed by 429.17 (50 Day) and the 418-420 area as larger support. To the upside, I would look watch the 450 area it corresponds with the declining Bearish trend line that has been in place for almost the entire year.
I wanted to quickly update my call on Amazon (Amzn) from early last week. The stock has started to rollover after going vertical and blowing past the $300 mark. The stock hit my first downside target of 298.25 in today's session. If you followed my post I would have taken off at least 1/3 of the position on the short side and would even now consider putting a stop order in to cover another 1/3 just above today's high of 303.84 going onto tomorrow. The company does report earnings after the bell tomorrow, so be careful because like a Google, Netflix or Apple, this stock tends to have large post earnings moves. The stock did create a negative MACD crossover on a daily today so if you are Bearish of the name I think the technicals are starting to lineup a little for a possible larger move to the downside. The stock will most likely gap well above the recent high of 309.39 or trade to the 50 day at 279.90 so be prepared for some volatility in the next two sessions.
By Joshua Kahan
Thursday, July 18, 2013
Despite closing at another All-Time high in several of the major indexes, the earnings after the bell today will play a big role in tomorrow's session. The S&P 500, The Russell 2000, and The Dow all closed at new highs. The problem is the last leg of this rally has come mostly from large cap tech names that have lagged the overall market and are perceived as safer bets than bonds at this point. All the money that has flowed out of the US Treasury market just ask Pimco as they saw record outflows of 14.5 Billion in June. All that money is bound to go somewhere and I think it has gone into the mega cap names like Apple (Aapl), Microsoft(Msft), Google(Goog), Amazon(Amzn), and maybe Netflix(Nflx). Well, after significant run ups two of the big guns failed to impress the street with their quarterly numbers today. Microsoft has traded down the last two sessions leading into earnings and it looks like the smart money got it right. The stock is down over 5% from the close while Google is trading down a like amount of 5% after disappointing the street. Look for solid support in Google around 844 the March 6th high. Will this be the start of another shallow correction? Possibly, but I think money will continue to chase yield and while I am somewhat Bearish, I believe most pullbacks will be bought chasing yield outside of the bond market.
I spoke about shorting Amazon in my last post looking for a move back into the mid 290s, and after seeing what happened with other some of the other Horsemen of the Nasdaq I think we will see the first small area of support below 300 at 298.25 tested. Being on the short-side has been really tough this year I would recommend taking off part of any short at 298.25 if given the chance. I still believe we will see 295 or possibly the 30 Day EMA at 287, but with earnings on the 25th I would lock in profits and play small with the houses money if you are aggressive.
By Joshua Kahan