Actionable Trades: SPY, AAPL, JPM, RIMM, LVS, SINA, GLD, SLV

Markets bounced around in a choppy trading session today, but posted the third straight day of gains.  Equities rose after a stronger than expected increase in July durable goods, faded mid day, but then rallied again to close on highs. SPY closed the day up 1.41%.  Technically speaking, it was constructive action to build on yesterday's gains.  Traders and investors are still waiting to see what the results will be from Bernanke's speech and whether he could being laying the groundwork for QE3.
    

AAPL was a good negative to positive trade this morning.  Yesterday AAPL had a strong move to the upside and played by the rules this morning when it went from negative to positive and pushed higher.  AAPL was a buy above $364-$367 with a target of $375-$378.  That target was reached today as the high of the day was $378.96.  It is important to take trades.  It would be constructive to see some sideways action in AAPL before breaking out of the upper wedge pattern.  



The banks actually helped the markets today for the first time in months.  That does not mean get aggressively long, however it is something to note.  JPM is acting best in the sector.  Yesterday it gave traders an 80/20 entry ($33.35) once it traded back through the previous day's low.  The stop was $32.31, which was the current low of the day.  80/20 trades give calculated, strategic entires when stocks become over extended on the short side or the long side.  Today JPM extended on the previious day's gains, closing up about 3.9%.  



RIMM Is highlighted as a buy through $27.50-$27.80.  This stock has been hammered on the downside this year, but it had surprisingly held up decently after crossing the mini downtrend line at $25.  RIMM is a laggard play, but that doesn't mean you can't make cash flow when it sets up.  Something to note, this is the first time RIMM closed above the 50-day moving average since April of this year.    



LVS gave traders a gap fill play today after a few days of consolidation.  It is trading below the 200-day moving average ($44.45).



SINA showed relative weakness to the market today as it closed down 4.52%.  It is still trading within the marco wedge and the range is getting pretty tight on the daily.  This should resolve soon.



It was a large down day for precious metals, as investors take profits ahead of the Fed meeting in Jackson Hole on Friday.  GLD and SLV were targeted on the Morning Call for follow through trades below the previous day's low.     

If you took the short trade today through $177.50, look to cover as the next support area for GLD is the 21-day moving average at $168.50.  This down move was fast and furious, however when you are in the right trade, you get rewarded. Margin requirements have been raised which is contributing to intensity of the sell-off.



SLV was weaker than GLD.  SLV closed down 4.43% whereas GLD closed down 3.39%. Avoid the lagging metal for now.

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.  

 

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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