Actionable Trades: S&P, SPY, AAPL, BIDU, AMZN, GOOG

The market continues to perform well since IBD put it in a confirmed rally, holding all key levels. Buying dips has been working if you had the courage to trust this fickle market.  Since Thursday's gap down, the S&P has climbed from a low of 1135 to today's high of 1220.  That's an 85 point move!  The volume in this move has been very light, however, and most if it can likely be attributed to a short squeeze. Whether or not this is a short squeeze or a confirmed rally, what we need to know is that we are coming into overbought territory with the oscillator climbing into the 70s.  It is risky to chase longs after an extended 3-day move, yet shorting strength will be a tricky trade as we do not meet resistance until the 1250 level.  This is a spot to sell some longs if you bought last week, or you can begin anticipating shorts, although it would be prudent to wait for higher prices before trying feelers.  Let's take a look at a chart of the S&P...





The SPY are coming into overbought territory which means it is time to trim longs.  There is minor resistance at the $123.50 level which is where the sell off accelerated.  Today, we reached a high of $122.43, which means there is more room to run.  New support levels are forming as we hold a gap above the $119 level.  We can use $119.26 as a line in the sand if you are holding onto long positions.  If we can continue moving with this strength, I would be a seller of all long positions as we reach $125.00.  The SPY have been climbing higher on light volume the past few days.  Expect a slow paced market this week as trading generally quiets before Holiday weekends.






Below are 5 charts from the Tech sector that indicate downtrends being broken to the upside.  These show that there is strength among the 2011 market leaders, which is a very healthy sign for other stocks.  Traders should look for a follow through day in the near futures but expect a few days of sideways action before moving higher.  

For months, AAPL was weighed down by the uncertainty over Steve Jobs' health and futures with the company.  Since the announcement lifted that cloud of uncertainty, it has traded with relative strength and is setup to trade back to all-time highs, which are only $15 away.

BIDU put in a higher low after CCTV released its investigative report.  Now it is breaking above a downtrend which should lead to higher prices.  

AMZN has been a go-to for leading stocks during the first half of 2011.  Now it is breaking above a steep downtrend channel and is only $15 points off its all-time highs.




GOOG is not acting as well as the other big cap tech names because of the depth of its pullback in August.  However, this is a stock in one of the strongest sectors and the pattern should lead to higher prices.

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.

Why Netflix Still Has Room on the Upside

Netflix (NFLX), the pioneer of the DVD by mail business and slayer of once mighty Blockbuster Video, has been on an absolute tear the past two years. Streaking up from the $40 value it consolidated under for nearly three years, the stock has since risen almost 700% and is up over 30% year to date.

As the company transitions to providing more streaming video, it has seen growth skyrocket, no doubt aided by the vast array of partner products their offerings can be streamed through. Netflix has been reallocating money saved from the expense of free mailing to building a much larger catalog of movies and television shows for its very supportive user base.

But growth of this magnitude has painted a bull’s-eye on Netflix’s back. With the transition to the digital landscape, it has opened itself to the vulnerability of competing against some very well funded competition -- Amazon (AMZN), Google (GOOG), and Apple (AAPL) being among the most notable.

The stock seemed to peak just over the $250 level and struggled for several months to make new highs, even forming a short-term head and shoulders pattern. Amid the pattern development came news of the departure of the CFO, and the start of Amazon’s new free streaming service for its premier members. Then came a potential knife to the jugular, Google’s deal to stream content from Sony Pictures (SNE), Warner Bros., NBC Universal(CMCSA), Lions Gate Films (LGF), Starz, The Weinstein Co., Magnolia Pictures, and many other independent studios. Fortunately for those who were bullish, it failed to break the neckline support at the $224 price level.

Recently came the news that Netflix will be working with Facebook, instead of Facebook taking on Netflix. An analyst at Pacific Crest Securities, Andy Hargreaves said:

"Facebook integration could boost global subscriber growth. We believe Netflix is working with Facebook to tightly integrate Netflix into Facebook's platform. This could help increase time spent in Facebook and drive incremental Netflix subscribers domestically and in new international markets. We believe that, on top of its existing momentum, the company is working with Facebook to launch deeper integration of Netflix into the Facebook platform. The first stages of these efforts are likely to launch within the next few months, and we believe they could drive incremental subscriber growth domestically while helping to accelerate Netflix's international expansion."

In a recent piece by the NY Times, Mr. Zuckerberg said: “Music, TV, news, books — those types of things I think people just naturally do with their friends. I hope we can play a part in enabling those new companies to get built, and companies that are out there producing this great content to become more social.” In the same article, Mr. Zuckerberg mentioned Netflix as one of the companies that had been in talks with Facebook.

Since that article came out, Netflix has popped above the aforementioned $254 resistance level, is now leaving that level far behind, and may seek out the $280 price target set by Oppenheimer in late April.

Equities that take the elevator up, often take it down. But you don’t have to give back your profits. Stay Protected. Smartstops has the short-term stop at $246.32 and the long-term stop at $228.00.

Editor's Note: For more, visit SmartStops.net.

The Four Horsemen of the Tech Sector: Leaders to Watch in Volatile Markets

Over eight months the market has steadily climbed upward. This ascent has been guided by the technology sector, and four explosive companies have led the charge.

Apple (AAPL) has been a leader, but as of late, its momentum has stalled. This slowdown in forward momentum is reminiscent of price action last summer. From a technical perspective, the stock has been forming a bull flag and has been holding above its 55 & 210 ema. I would be hesitant to invest more than a feeler at this point until it more clearly resolves to the upside and starts to break above resistance at $360. SmartStops.net indicates the short-term stop is $341.06 and the long-term stop is $339.49

Google (GOOG) has been the laggard in this group for some time now. Lower than expected earnings and the market’s disdain for new CEO Larry Page have led it down. And while it may be tempting to buy on recent news, the technicals don’t bear it out. The stock is trailing the 55 and 210 ema. Smartstop.net projects the short-term stop is $527.77 and the long-term stop is $525.04

IBM (IBM) has shown relative strength, leading the 55 and 210 ema. After a brief pullback the stock looks like it may make new highs. Smartstops.net has the short-term stop at $165.73 and the long-term stop at $158.75

Amazon (AMZN) has been the recent leader in this group after nearly bouncing off it 210 ema. The stock is showing a lot of relative strength and looks to continue to make new highs. Smartstops.net has the short-term stop at $187.85 and the long-term stop at 168.24

The four horsemen were leading indicators of doom. Keep an eye on leaders to protect yourself from volatile markets. Market leaders are known to drop 72% from their peak per Investor's Business Daily.
Editor's Note: This content was originally posted on SmartStops.net.