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Select Stocks Provide Fireworks but Market Remains Quiet

Scott Redler and John Darsie
Jan 14, 2013, 5:12 PM

Stocks were mixed Monday as all major indices finished around the flat line. It was another quiet day for the market, which has been lethargic following a fast start to the year. Short-term traders have been a bit frustrated by lack of volatility, but swing traders are viewing this action has healthy digestion before another potential leg higher. After dealing with the anxiety of the fiscal cliff, investors are now taking this time to catch their breath before what could be another contentious partisan negotiation around the debt ceiling.

 

The market continues to hold up in spite of persistent weakness from former market leader Apple (NASDAQ:AAPL). AAPL opened sharply lower this morning after a report in the Wall Street Journal indicated the company was cutting back on component part shipments for the iPhone 5 due to weaker-than-expected demand. The stock showed no life during the session and closed near where it opened. The new pivot low to watch is $498.51.

 

Dell (NASDAQ:DELL) provided fireworks today amid reports a private equity firm is exploring taking the company private. Marc Sperling identified a tight mid-level base in the stock and was long calls prior to the big move. The news added fuel to what was already a bullish technical picture. Dell finished the day up 13.0%, and traders will be watching is closely to see whether it holds those gains in the coming days.

 

Facebook (NASDAQ:FB) had an extremely impressive run to start the year after we highlighted the cup and handle pattern in Scott Redler's 2013 predictions. Tomorrow's "event" has been part of the catalyst for FB's bullishness, but today the stock got its strongest sell signal in weeks. The stock opened at new pivot highs this morning, but was weak right off the opening bell and engulfed Friday's candlestick. We do not believe in shorting strong stocks for more than just a quick cash-flow trade, especially in a strong market tape. FB could be due for some rest, but I wouldn't get greedy if you are short.

 

Research in Motion (NASDAQ:RIMM) erupted out of a tight flag Friday following reportedly leaked images of its new BlackBerry phone. With the mystery surrounding the Facebook event tomorrow, there has also been speculation that the social networking company could be interested in acquiring RIM to boost its mobile clout. Facebook CEO Mark Zuckerberg has in the past indicated it was not in the company's interests or plans to enter the hardware business, so in our opinion such a scenario seems unlikely. RIMM did show commitment to Friday's move though, finishing today up 10.3%. Traders will certainly have this on the radar tomorrow surrounding the Facebook event.

 

We have been covering Amazon (NASDAQ:AMZN) closely as it has led the tech sector of late, most recently our Editor John Darsie highlighted it on Friday's Daily Recap video. The stock had put in a very nice upper level consolidation after breaking out to new highs, which is one of our favorite set-ups. Today, AMZN broke out of that base and posted a 1.8% gain.

 

The other upper level base we pointed out on Friday's recap was in Salesforce.com (NYSE:CRM). The stock did not see an explosive move today, finishing up 0.4%, but continues to work higher. Keep it on your radar.

 

Overall, we are seeing some terrific tradable action in a select few stocks, but overall the market remains in a quiet resting period following volatility around New Year's. Ultimately the action is constructive for higher prices going forward, in our opinion, so continue to do your research to identify the stocks you will target if we do break above September highs on the S&P. It's also prudent to have a list of stocks in your back pocket in case the market starts to roll over a bit. That's all part of being a prepared trader, and we help you with that on the morning Price Point Sheet and nightly Off the Charts newsletter.

 

 

*DISCLOSURES: Scott Redler is long DANG, VMW, DELL, GE, ZNGA, TBT, BAC, INTC, F, LNKD. Short SPY, HPQ.

Last Updated ( Monday, 14 January 2013 18:05 )
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