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Time to Take Profits or Stay the Course?

Scott Redler
May 6, 2013, 8:29 AM


Futures are basically flat Monday morning after another impressive move in the stock market last week. The S&P cleared 1600 with some authority Friday as the job’s data came in better than expectations. Many are saying, what do we do now?  It’s the same question that people have asked as we’ve climbed and reached milestones over the course of the last several months.


So far, the markets have been able to clear multiple pivot areas in 2013 without much push back.  Each pullback has also been supported by the 50-day moving average. So the answer to that question has been “a lot of the same.” They say the trend is your friend, until it isn’t. You can approach each level/phase with less size, and fewer positions, but those fighting the trend are dealing with a large amount of frustration.


On a micro level use the gap from Friday as your pivot to trade against. Some digestion would make sense as we are very extended from the 8 –and 21-day moving averages again. The gap starts at $161.04. We can measure how strong this area is by how this gap gets treated. If we hold above for a few sessions, then there’s no reason why we can’t see a move to $164ish in May. If we fill the gap quick, then the speed could slow down and we could be in a more choppy environment for the Summer.


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Tech continues to be filled with opportunity.


Google (NASDAQ:GOOG) is best in breed in high beta tech and reached a new historic highs Friday. This stock has been acting well since last year.  Even in 2013 it gave a few new entries, the last one as it broke its descending channel after earnings around $803ish. Now it’s trim and trail.


Apple (NASDAQ:AAPL) since earnings has provided a few tradable set-ups. From $420 up to $453 was very tradable, for example. At this point I don’t see a clear set-up. The target was raised by Barclays and it does have room to fill a gap up to $460 then the recent pivot high was $469.75.


Netflix (NASDAQ:NFLX) has been a great mover this year.  It’s been in this upper very tight range since earnings. The 8-day has caught up so something could happen soon this week. Some are looking to short below $209.50 and some are looking to buy above $218-220.  I will be watching this closely.


Amazon (NASDAQ:AMZN) broke below its 200-day for a day, so my 1-3 session rule worked pretty well there. It has some room to $260-263 but is very choppy.


LinkedIn (NASDAQ:LNKD) is a nice example on why I don’t take stock into earnings reports, or I suggest reducing before.  Lots of earnings risk in all names.  This one at least gave you the trade to $200 before the numbers so it gave you additional reasons not to take it as the move happened before the report. At some point it could be buyable again. Use $173.72 as a pivot to trade for action, then bigger support at $165.


Facebook (NASDAQ:FB) tried to make a move after earnings as the narrative focused on solid growth in mobile ad revenue. It did act well on Thursday, but was weaker on Friday as Barron’s continues to bash it. I guess they have some leaks over there, as it seems like it goes down before these type of stories. I will look to see it it’s buyable into the $27.50-28 area. If this doesn’t hold it will probably go back to the same choppy trade.


Intel (NASDAQ:INTC) was upgraded and has been acting well since clearing our $22 pivot—still looks good.


Microsoft (NASDAQ:MSFT) has been a great vehicle on an active and medium-term time frame. I think $37-38 could happen this year.


Banks have been a bit lethargic.


Goldman Sachs (NYSE:GS) - you could trade this vs. $145ish but it needs to clear $148 with some authority for better action.


Morgan Stanley (NYSE:MS) has been acting a bit better. You could trade it vs. $22.67.


Bank of America (NYSE:BAC) has been a bit lethargic. It needs to clear $12.50-12.55 to act better.


Wal-Mart (NYSE:WMT) acts well and could see another move above $79.50 but be careful.


Target (NYSE:TGT) continues to trend, the pivot here is $71.


TJX Companies (NYSE:TJX) is a great acting stock and closed at highs. I’d trim and trail.


Boeing (NYSE:BA) tacked on another new high Friday, and has been a great 2013 vehicle. Trim and trail.


Regeneron (NASDAQ:REGN) from Off the Charts was a rock star last week.  Congrats if you were there.


Jazz Pharmaceuticals (NASDAQ:JAZZ) has been sloppy but could act better above $61.


Alexion (NASDAQ:ALXN) has had many false starts, but keep $101 as an action spot if it gets big volume.


Keryx (NASDAQ:KERX) is a little one that has been constructive. The next pivot $8.75ish.


Celgene (NASDAQ:CELG) bounced well of its 50day but needs time.


Metals have an inside range right here.


Gold (NYSE:GLD) on a macro level is a bit broken, but short-term if it can get a move above $143-143.50 it could see a move to re-test $148ish. Just be careful.


The Inverse 20+-Year Bond ETF (NYSE:TBT) finally had a gap and go that stuck. See if it can hold its gap of $60.19.


At this point I don’t have much going on. I’m not fighting the trend but sold most of my longs into Friday’s gap up. I will tactically trade the next few sessions. If we hold this level well, I might put back on a limited portfolio approach.



*DISCLOSURES: Scott J. Redler is long BAC


Last Updated ( Monday, 06 May 2013 08:56 )