Markets today are digesting big gains from the last three days, which is a natural and healthy occurrence during a rally. The Dow has rallied more than 750 points in three days, so it can be forgiven for wanting some rest.
While the indices stall, some individual names on my watch list are providing nice short-term momentum.
Former leaders Apple (AAPL) and Amazon.com (AMZN) are playing a little catch up. If they can repair their somewhat sloppy charts, it would be a major positive sign for this market. AAPL traded through yesterday’s high and has room now to $388-394. If you are going to be long, make sure it holds $383 as your out. AMZN triggered through $195.50, and acts olay with bigger resistance around $200-204.
Google (GOOG) continues to be very impressive. Since its strong earnings report last quarter, we have listed it as a long set-up while it held the gap up. GOOG had a strong snap back above $600 right into 612-615 resistance.
International Business Machines (IBM) looks like it’s knocking on the door for new highs soon above $188-189.
Earlier, I posted about a bullish inverse head and shoulders pattern forming in the OIH. The pattern is not yet fully formed, but I believe it is worth a tier 1 long.
One trade I am in this morning is Focus Media (FMCN) long, which is an atypical type of trade for me. FMCN was the focus on short-seller Muddy Waters' latest report, and has been hammered in the past two weeks. On Monday, Carson Block of Muddy Waters appeared on CNBC Street Signs, and many people got short anticipating damning testimony. However, the appearance turned out to be somewhat benign, and shorts have been on the ropes ever since. This will only be a day-trade for me, playing these thin, controversial stocks can be a dangerous game.
I didn't trade Green Mountain Coffee Roasters (GMCR) this morning, but it has some similarities to FMCN. GMCR has seen heavy selling since David Einhorn outlined his bear case on the company, and then an earnings miss pushed it off a cliff. You had to be quick this morning to catch it, but the break through $53.50 was the important level.
Another beaten down stock, Research in Motion (RIMM) also gave a some nice opportunity around $18 with the Microsoft (MSFT) news.
Banks are starting to weaken a bit after yesterday's big moves, and I will be watching them closely to see how much of those gains they give back. If they can't hold them, it will be a bad sign for this rally.
S&P resistance is 1252-1255 and then 1260-1264, but it looks like this morning we will be more closely watching support. Look at 1235-1238 as first support, and then 1224-1228.
Some headlines are hitting about the ECB having no involvement with IMF, let's see how market handles it. Stay focused and disciplined in this fickle market. Stocks just had a big three day move, don’t get too excited and blindly chase up here. Let the market come to you.
*DISCLOSURES: Scott Redler is long OIH, AAPL, AMZN, FMCN. Short spy
