US stock futures point to another higher open on Wall Street Monday, which is becoming a familiar story to start the week. The market exploded to the upside to kick off last week after world Central banks agreed to make a coordinated effort to boost dollar liquidity. Because news out of Europe is driving the action, most of the action will come pre-market.
Today’s big gap up could be attributed that there are some reports that the ECB is preparing $1 trillion cash injection for the Eurozone. There are also reports that new Italian Prime Minister Mario Draghi is working on a plan for huge invention. The focus for next Friday’s meeting will be if fiscal and political compromise could be reached in Europe, with perhaps some tweaks to the Eurozone treaty. The headlines will continue to roll out and the markets will continue to be pushed around, probably in both directions. It’s important for market participants to know what the market is looking to hear and then measure the response.
The S&P’s are right back where they failed a few weeks back. The 200day served as resistance on Friday after the “exciting jobs number”, and this area will be tested again this morning. This time the bears might not be so lucky. 1260-1264 is an important area to watch this morning. A daily close above this zone should trigger another round of short covering, and perhaps some performance chasers. 1275-1277 is the next area to watch.
Bigger resistance is the October 27th high of 1292, and with a close above this area in the coming weeks and we can see 1320-1340 in January-February.
TECH
Apple (AAPL) gave us a nice trade as it held the 200-day in the $363 area. I also listed it for cash flow as it ignited above $376-$387. Now it might have a tough time where it failed in the $392-394 area. Could be a spot to sell some longs or try a cute short. This macro pattern needs more time.
Google (GOOG) technically looks great. The weekly charts look great, but on the daily it’s a bit extended. Overall it looks to make new highs and hit $700+ in 2012.
Amazon.com (AMZN) still in the penalty box for macro traders after poor earnings, and is under all moving averages. $200-204 is some resistance.
Baidu.com (BIDU) had a nice move from the $120 support area. This is one of the only decent Chinese stocks left for now. It needs some time to consolidate. $140-$145 is big resistance.
Sandisk (SNDK) is above all moving averages, but at some bigger resistance.
International Business Machines (IBM) looks ready for new historic highs. Initiating up here could be tough, though.
VMWare (VMW) is slow and needs time.
Intel (INTC) acts very well but is at some resistance. It's above all moving averages, but will need some time before we take out $25-25.50.
Financials got a nice oversold bounce last week, but most have reached my bounce targets.
Goldman Sachs (GS) bounced but reached my $98-102 resistance zone. Now it needs to hold above $95-98 to keep the long side momentum.
JP Morgan Chase (JPM) big move into the moving averages and big support around $33. Let’s see if it can stay above $31.
Bank of America (BAC) has some room to $6-6.15, but it's not that compelling.
Morgan Stanley (MS) hit $16 quick and needs some time.
Oil Service ETF (OIH) has an inverted Head and Shoulders pattern that could trigger a macro move higher.
US Steel (X) could be a decent January effect type play.
It’s been a very unusual, fast market. You had to switch gears quickly last Wednesday. IBD still has us in a market correction. I would have thought they would have put us back in a confirmed rally on Wednesday. I guess they need to see more action, like the rest of us. If we don’t fade today and close 1% higher, I’m sure they will change the big picture. Important to know your timeframe and risk tolerance. I don’t see any tight patterns with triggers unfortunately due to the type of move we saw last week. At this point managing some positions with a hedge can be a way to stay with the trade and invovlved.
Strong stock usually end the year stronger, and some weak stocks could benefit from some window dressing.
*DISCLOSURES: Scott J. Redler is long SPY, OIH, XLF, GOOG, INTC.
