Actionable Trades: SPY, BIDU, AAPL, OIH

The possibility of a US debt default still weighs heavily on the market.  Today we saw a small oversold bounce in the morning, which was met with selling in the afternoon for the SPY to close on its lows. SPY is trading below the 100 and 50 day moving averages today.  For now, it is time to stay light and in a wait-and-see mode as things are uncertain regarding the debt ceiling situation.  $129.63 is the next point of reference. Look to market leaders to buy potential dips, but don't start too early. Tail risk is high right now.  

Above is a short term picture of SPY, so when we hit oversold readings like we saw this morning, the active trader can take advantage of cash flow trades.  As for the swing trader, wait for more data and precise levels. Some market technicians are looking at this macro Head and Shoulders pattern that could be developing in the SPY.  This pattern is triggered with a break of the neckline that stands at $128/$128.50.  If this pattern triggers, the target is $120-$117, which corresponds with a big support area from last November.  It is hard to be short going into the weekend with the headline risk that is out there.     
   

Today we saw a small bounce for the active trader but for the swing trader, wait for more clarity.  There will be an opportunity to buy back market leaders once this market settles, and BIDU is certainly one of the market leaders after a strong earnings report.  This is a stock to buy a dip, but wait for key support levels.  First zone to test a buy back is a retest of prior highs: $156.06-$152.90, which is the 10 day moving average.  If that zone doesn't hold, look to bigger support level of $147/$147.50.  BIDU is trading far off its moving averages, it would be healthy to see some digestion in this stock before working its way higher.

AAPL is another go-to stock for strength after a blockbuster earnings report this quarter.  AAPL is extended well off its moving averages.  First spot to test a buy back is $383.90, which is the low from its earnings gap and coincides with the 10 day moving average. The next level to test a buy back is $366-$364.90, a retest of prior highs.      

It was noted earlier this week that the OIH's were coming into the resistance area that was highlighted from the previous buy entries, which was a good spot to lighten up on the trade.  $155-154 is the first area to test a buy back.  $150 is the next key area to hold in the OIH's, which is support of the 50 day moving average.  Remember to buy dips in the market leaders when the market is in correction mode. 
       

  

Sometimes in the market, there are times to be in cash, and now is one of those times.  

Actionable Trades: SPY, QQQ, BIDU, AAPL, OIH, RIMM, NTAP, RVBD

SPY got hammered today as investors begin to take the possibility of a US debt default more seriously, trading below key support levels. SPY closed below the 100 and 50 day moving averages today.  For now, it is time to stay light and in a wait-and-see mode as things are uncertain regarding the debt ceiling situation.   $129.63 is the next point of reference. Look to market leaders to buy potential dips, but don't start too early. Tail risk is high right now.  

Potent down day in QQQ, as the Nasdaq led all indices down 2.7%.  This is a sign to lighten up on your positions, but $56.87 is the key level to hold for strength and upside momentum.  Watch the price action and be cautious. 
    

There will be an opportunity to buy back market leaders once this market settles, and BIDU is certainly one of the market leaders after a strong earnings report.  This is a stock to buy a dip, but wait for key support levels.  First zone to test a buy back is a retest of prior highs: $156.06-$152.90, which is the 10 day moving average.  If that zone doesn't hold, look to bigger support level of $147/$147.50.  BIDU is trading far off its moving averages, it would be healthy to see some digestion in this stock before working its way higher.

AAPL is another go-to stock for strength after a blockbuster earnings report this quarter.  AAPL is extended well off its moving averages.  First spot to test a buy back is $383.90, which is the low from its earnings gap and coincides with the 10 day moving average. The next level to test a buy back is $366-$364.90, a retest of prior highs. 
     

It was noted earlier this week that the OIH's were coming into the resistance area that was highlighted from the previous buy entries, which was a good spot to lighten up on the trade.  $155-154 is the first area to test a buy back.  $150 is the next key area to hold in the OIH's, which is support of the 50 day moving average.  Remember to buy dips in the market leaders when the market is in correction mode.     
   

  

When the market has big down days like we saw today, look to the stocks highlighted in previous newsletters that are showing relative weakness.  RIMM (July 14th), NTAP (July 14th), and RVBD (July 25th) are weaker than the market and are trading below key moving averages .  The market closed the day -2% and these stocks closed -5.95%, -4.5%, and -6.3% respectively.  

 

Actionable Trades: SPY, MCP, BIDU, YOKU, INTC, V, SLB, SLV, TZOO

SPY is holding the $133 level for now.  There are a lot of strong earnings from market leaders, but it is waiting on a resolution to the debt ceiling.  The chart still looks constructive as we flag in front of resistance and hold above key moving averages, but the action right now is very headline driven. While most expect a deal to get done at the 11th hour, it is important to stay plugged in.  Tonight we saw positive earnings from AMZN and LVS.  

Trade Update:  MCP has been a good focus in the past week with the first entry at $55 with an additional add-on buy above $61.  It closed strong today, +6.25%.  Use your own trading rules to take profits.    

 

BIDU has been another good targeted trade as it made a strong move into earnings.  Positive earnings were released last night.  BIDU gapped above 52-week highs and looks good for higher prices.  Wait for a few days of consolidation of this big move as it is extended from previous buy entries.

 

The Chinese internet sector showed relative strength to the market today after a strong earnings report from the leader in the sector, BIDU.  YOKU is a laggard play in the sector, but has a decent chart set-up and closed the day +9.50%.  Today was the first day up in this stock, look for continuation over today's high of $37.45.   

 

The semiconductor chip makers have had solid moves from stocks like IBM, MSFT, and INTC. The stock is a bit of a slow-mover, but a close above $23.25 in INTC could trigger a move to new highs.   

  

The credit card sector is performing well.  Visa has earnings tomorrow, Wednesday, July 27th, after the close.  It could have a run into earnings or wait til after to make a move.  Look for a momentum play above 52-week highs of $90.83. 

 

SLB, an oil stock, posted earnings last Friday, July 22.  It is holding the gap-up and consolidating in front of 52-week highs of $95.64.  This could have a momentum move through those highs.  Watch the price action in this stock.

 

SLV is holding above the 3 month range.  An additional buy is above $39.90-$40.  Also look to the chart of FXE which looks good for higher prices, which has a positive affect on commodities.  

For the active trader, TZOO is setting up for a quick trade.  Although, it had a big gap down on earnings, it is holding up well and the range is getting very tight.  Look for a move above today's high of $61.60 with an add above $63.27 to fill some of the earnings gap.  First resistance is $67.28.   

 

Actionable Trades: SPY, OIH, MCP, YNDX, LNKD, BAC, GS, MS, JPM, V, RVBD

SPY gapped down this morning as there was no resolution to the debt ceiling over the weekend.  The market took this news in stride and rallied most of the day before selling off into the close.  The chart still looks constructive as we flag in front of resistance, but the action right now is very headline driven. While most expect a deal to get done at the 11th hour, it is important to stay plugged in.  More market leaders have earnings that come out this week as well. Tonight we saw earnings from BIDU (positive) and NFLX (negative).  Tomorrow night we will see earnings from AMZN and LVS.   

Trade Update:  OIH is performing well as it extends from the most recent buy entries.  Today was a spot to lighten up on OIH as it ran into resistance 1 from the previous entries that were targeted. There have been strong earnings reports from some of the companies in the OIH, like HAL, SLB and BHI.  This can continue higher as it's not far off of 52 week highs, but had a nice 5 day move from the most recent $155 buy entry.

MCP was targeted last in last Wednesday's post as it was wedging on the daily chart.  MCP is now holding above the wedge and put in an inside bar today.  Look for an additional add-on buy above $61.  First resistance is $62.50-$63. 
  

          

A recent IPO, YNDX, is poised to make a move soon.  First entry is a close above $37 with an additional cash flow add through $37.90.  $42.01 is the high from the day of its IPO.       

Although there was a negative article out of Barron's over the weekend about LNKD, it never broke below the most recent pivot point of $96.20.  LNKD is holding higher and looks good over $105 and then the most recent high of $110.50.  Watch the price action here, this stock is hard to get a grasp on. 

  

The banking sector has shown signs of life again as they break above downtrend lines and stocks like BAC, GS, and MS have bounced well off of lows.  JPM is trading and holding above the descending trendline.  Look to buy on a dip because if this move has any validity, it should not trade back below the long term descending trendline.  Today, GS showed relative strength versus the market as it was up 1% on the day. 

 

The credit card sector is also performing well.  Visa has earnings this Wednesday, July 27th after the close so it could have a run into earnings.  Look for a momentum play above 52-week highs of $90.83.

 

It is becoming harder to find shorts in this market as it is slightly off 52-week highs, however, this is still a market of haves and have nots.  RVBD posted earnings last week and closed on the lows of the days.  It is now bear flagging on the daily and has had time to absorb some of the most recent down move.  Look for a break of the bear flag at $30.90.

 

Are Precious Metals Ready to Break Out?

By Raghu Gullapalli


Over the past eight days, the market is up 7% and seems ready for a pullback, especially on the news of poor non-farm payrolls. But one element of the market that seems to be gathering momentum right now is the precious metal segment, namely gold and silver.

Silver -- which, in the humble opinion of this trader, was being accumulated -- looks ready to break out above the $5 dollar range it's been bound to over the past two months.


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iShares Silver Trust (SLV), the exchange-traded fund, is approaching the reentry level set bySmartStops, at $36.71. This may prove to be a great setup in terms of risk reward, as short-term stop on SLV is $34.34 and the long-fterm stop is $33.79. The upside on this trade is substantial, as SLV may well seek out the highs from late April in the days to come. Part of my bullish bias on this trade comes from the fact that during this eight-week period of accumulation the ETF never dropped below its 210-day moving average.


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Gold, on the other hand, has been testing the $1550 level, and now it seems like the perfect storm of variables are brewing to push the metal through this level and possibly even to the $1600 year-end price target set by many market technicians and gurus.


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The depressing US jobs number, the downgrade of Portugal, and the increasing fears of a default by one of the PIIGS (Portugal, Ireland, Italy, Greece, Spain) are the catalysts for this new drive up. The rest of Europe and their myriad of financial institutions have tremendous exposure to these countries' debt, and a single default by one of these countries could set off a domino effect. This would make Lehman’s collapse look like a tempest in a teapot. And in the midst of any storm, people flock to anchors to keep them secure. In these tumultuous markets that anchor is gold, and by proxy, silver.

SPDR Gold Trust (GLD) just like SLV has held strongly above its 210-day moving average and is also offering a good risk to reward trade. SmartStops has the short-term and long-term stops at $146.64 and $145.75 with a reentry into GLD at $151.86


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Netflix Expands to South America

By Raghu Gullapalli


This morning news came out, courtesy of All Things Digital, that Netflix (NFLX) was expanding its operations into Latin America.

Once the news broke, the stock gapped up in the pre-market and looked ready to launch its booster rockets once again in attempt to break the $300 barrier.


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This is a prototypical example of a long gap trade.

• Netflix gapped above a long-term resistance level, in this case the all time highs of $277.70.
• The premarket volume in the stock exceeded 500,000 shares, ensuring liquidity.
• The stock gapped up more than 3%
• Netflix gapped on a strong catalyst that did not involve earnings, i.e., the news of its impending expansion into the Mexican, Caribbean and South American markets.

This expansion into these markets gives credence to Netflix’s foreign expansion plans and lends credibility to the company’s overall strategy. If you will recall, just last fall the company expanded into the Canadian market and in just a few quarters of operations it has emerged as the market leader.

With the equity markets reacting well to the news of the Greek bailout and the strong surge over the past week, I have little doubt that the tailwinds from the market could be enough to push the stock into the hallowed $300 territory -- an area occupied by precious few technology companies.

If all that wasn’t enough, how about a cherry on top? The cherry takes the form of an “F” for Facebook, the social media behemoth, which has been considering a joint venture with Netflix. Facebook recently added Reed Hastings, the CEO of Netflix to its board of directors.

But a word to the wise: In this dynamic market landscape, today’s darling could well become tomorrow’s dud, as is well represented by the misfortunes of Research in Motion (RIMM). Market sentiment could change very quickly and could become headwinds blowing in the face of upward momentum.

Smartstops has the short-term and long-term stop for Netflix at $239.64.


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