Daily Wrap

DJIA +14.75 (+0.11%) to 13,169.88; S&P 500 +0.48 (+0.03%) to 1,418.55; NASDAQ +8.92 (+0.30%) to 2,986.96;

During last night’s trading and early in the morning Monday we saw the S&P 500 futures treading lower, finally bottoming at 1410.75 around 6am EST and then steadily rally throughout the remainder of the morning to 1421 at 11am EST.  The remainder of the day was somewhat choppy and the focus was on Italy.  News of Prime Minster Mario Monti’s intentions to resign sent bond yields spiking and the markets dipping as the feeling was of somewhat shock/surprise and again another scenario of uncertainty and we see how the markets feel about uncertainty.

Also in the news today was China with strong Industrial output rising 10.1% in November from a year ago.  The export number was not as impressive as October’s (prior month’s) data but I think you can give it another month to see if that was a one off.

McDonald’s (MCD) was a stock of the day today and closed up 1.4% on global same store sales coming in at up 2.4% and being lead by the United States.  Looking at the chart and fundamentals it is hard for me to point to one metric and say a bottom or top is in but I feel as though the recent rally and downward sloping 200 day SMA 2 points higher make me less interested in the name.  I feel that I will have a better opportunity to look at a name like MCD and that may mean at lower prices or possibly higher but with more clarity.  Either way MCD is not on my watch list.  MCD has recently seen upgrades including on December 7th being added to Deutsche Bank;s short-term buy list and and upgrade to Buy at Janney with a $104 target.

Another Big cap name making waves today and this one actually moving higher since a gap down on 11/20 is Hewlett-Packard (HPQ).  HOQ’s move today was on speculation that Carl Icahn is building a stake in the beaten down tech company.  Known as an activist investor many would then take that to mean Carl will get involved with pushing the company to sell assets, break itself up, take board seats and all of the other tricks Carl uses to extract wealth for himself and other fellow shareholders.  David “the brian” Faber dispelled those rumors but HPQ held in well for the day albeit off the highs.  I have to say that this does seem to me like a situation Carl might be interested in but we will have to see.  I have written about HPQ before. I think Meg Whitman has a tough road but I do think she can right the ship.  I just didn’t/don’t want to be the early guy and will be happy even paying higher later when I have more clarity and conviction.  I do think you can trade against the recent lows, unfortunately they are at $11.35 which would be a near 20% away.  HPQ could see some resistance here and provide a pullback making the stop more palatable for a trade or earl investor.  If I was going the early investor route I personally would only be looking at a 1/5-1/4 position and likely would just use leaps.

Priceline.com (PCLN) was downgraded today at  to Hold from Buy at Deutsche Bank sending the stock just over 5% lower.  Deutsche Bank noted increasing competition in 2013.  I noted that I would be using a stop just below the 200 Day SMA on the remaining PCLN position and that stop would have been triggered right at the open.  I think PCLN could still look for higher levels and I will be watching how the stock digests this move in the coming days.

Infinity Pharmaceuticals (INFI) moved over 20% on positive trial data and an upgrade from Stifel to Buy.  Zogenix (ZGNX) was sent down nearly 50% after an FDA advisory panel voted against recommending approval for their pain relief drug.

As always you can visit the Event’s Calendar for the release of economic data, scheduled meetings and other news that could move the market.

According to Briefing.com, the following noteworthy companies are scheduled to report earnings before tomorrow’s open: CMVT, DG, PTRY

Back to the markets and the S&P 500.  Looking at the 4 hour chart of the SPY I really feel as though the stock is calling for a move lower.  Even if that move is just a dip to shake some weak longs and provide a better technical set-up.  Otherwise for me right now there is not much screaming Sell except I don’t like the way the pattern is forming.  If we do break the resistance levels then the down trend line becomes my initial target which would likely take the index through the 62% fib on the daily and toward the horizontal resistance at 1434.  On the downside the levels I would be watching on the index are 1409 (50% fib), 1393.45 (38% fib) and 200 day SMA (magenta line currently 1386).