Actionable Trades: SPY, CF, GOOG, AAPL, OIH, HAL, CRM, DE, CAT

The wild ride continues in the markets, but the action today was a little easier to manage than the previous three days.  The Dow closed up over 400 points today, down more than 500 points yesterday, up over 400 points Tuesday and down more than 600 points Monday.  This is, in fact, the first time in history that the Dow had moves of 400+ points in four consecutive days.  Pockets of strength are starting to show, which is a positive sign for the markets. But that doesn't mean you should start chasing excitement. The same problems are still looming over us, and the VIX hardly pulled in, suggesting many people are still seeking downside protection.  On the positive side, the SPY held the lower pivot entry and extended above Tuesday's high today.
  

After a bullish crops report this morning, CF made new 52-week highs, a positive sign for the market.  CF is the leader in the agriculture sector and finished the day up over 10%.  This has already had a run into new highs, and considering it is coming from below $140, it would be better to see some high level consolidation or a pull-back to get involved.  It is best not to chase highs, especially in this environment.  




GOOG has now filled the gap on the downside from earnings and is currently trading above the 100-day moving average and the 50-day moving average.  It looks like GOOG could form a potential wedge pattern before making a new move.



AAPL continues to show relative strength to the market as it holds above key moving averages and began bouncing earlier in the week, giving clues to a bounce in the market.  AAPL held support of the 50-day moving average and only pulled 12% off of highs where as the SPY had a 20% pull-off of highs.   A new range is forming in AAPL and it could see an easy bounce up to $381-$383 before running into resistance.  AAPL is a good tell for the rest of the market.  




OIH has been hammered as the market was falling.  OIH had over a 20% move off of highs when it was at the lows from Tuesday.  There is a lower pivot forming in OIH that could provide an actionable trade soon.  Other stocks is in the sector are forming similar patterns, look to HAL, SLB, and OXY.



HAL is one of the leaders in the OIH's.  See how this lower pivot area resolves.



There was strength in the cloud computing sector today.  CRM cleared the lower pivot area to day with a clean break above the range.  Stocks like VMW (+4%), FFIV (+4%), and APKT (+10%) contributed to the group's strength.  CRM had room for a bounce to the $140 area.  Continue to take trades though.  



DE and CAT have similar chart patterns.  DE cleared the lower pivot area today and closed over +8%, where as CAT closed over +4% and has not cleared the lower pivot area.  Perhaps CAT can play catch up with DE.  DE has room up to $77-$80, if the market continues in its oversold bounce.

Will LinkedIn's IPO Confirm Internet Bubble 2.0?

Three years ago, at the peak of the financial crisis, Jamie Dimon’s daughter reportedly asked him, “Dad, what’s a financial crisis?” His reply, “Something that happens every seven years.”

The crisis that preceded the current one was caused by hyper-inflated valuations of Internet companies that made no profit, and about whom investors knew little or anything about. Sound familiar?

Yes, we could be talking about numerous companies that have hogged recent headlines: Facebook, Zygna, Twitter and LinkedIn, for example. All are purveyors of what's known as “social media.” All have been the subject of intense speculation and rather opaque trading in the private stock trading markets. But now one is about to depart the safety of those illiquid markets and is venturing out into the public.

LinkedIn goes public this morning with as much hype as can be expected of the vanguard of social media. Despite its $45 price, many observers, myself included can only wonder if its fate will resemble that of Renren (RENN). The self styled "Facebook of China”, Renren has had a very rocky reception in the market since its own IPO. It's now trading at little more than half of its public offer price.

My gut tells me LinkedIn’s IPO may be more of the same. There's a lot of excitement, regarding this company. Smart traders and investors sell when the market is excited. I would wait until some of the fervor dies down before entering this trade.

Now if you're interested in web-based companies but seek those positive checks smart investors seek, such as profits and market share, you will not have to wait for a possible Facebook IPO. The cloud space has several established players but none is bigger than Salesforce.com (CRM). Salesforce is the market leader in customer relationship management software and is growing consistently. Its current valuation at 10 times sales may seem steep, but given the vast array of analysts who believe its price should be around $155-$170, it may be turn out to be a value growth play if the market continues yesterday’s upward bounce. SmartStops.net has a short-term stop at $125.79 and the long-term stop at $121.66.

If cloud computing seems a little far-fetched for you, what about business-to-business networking, otherwise known as social media for businesses? Now imagine it coming to the web. I’m talking about potential $12 trillion in business. Did that start up your saliva glands? Ariba (ARBA) is the leader in this space. They are a way ahead of their competition. And the market has appreciated its subscription-based revenue model, pushing the stock up 400% in the past four years. So, is Ariba undervalued, or is LinkedIn overvalued? The market will tell us. According to SmartStops.net Ariba’s short-term stop is at $29.67 and the long-term stop is at $28.49.

Editor's Note: This content was originally posted on SmartStops.net.