Week in Review
DJIA +119.95 (+0.86%) to 13,981.76; S&P 500 +13.18 (+0.88%) to 1,519.79; NASDAQ +30.33 (+0.97%)
I won’t spend too much time on Friday’s action but the futures seemed to have a positive tone even in early trading which I believe was build up off trading into support and holding around the 1500 level in the S&P 500. To further assist in the cause we had positive earnings reports out of two majors which I will list below. Otherwise today felt more as though we were snapping back some of the previous losses in more of a pure technical move.
Two Dow names making news with positive earnings were AIG (AIG) and Hewlett-Packard (HPQ). I featured HPQ last night as their earnings were out before I prepared my write-up but Friday was the first day of trading to gauge sentiment. I noted potential resistance around $18.50 but HPQ pressed higher and closed at $19.20. If HPQ is on the mend it could definitely target $21-23 even short term but I would be looking to play a pullback after such an impressive move. I will keep an eye and look for potential set-ups.
AIG was the other name moving higher today after earnings but did close well off the highs. AIG has been on an impressive run of late but would likely be a name I skipped playing. If it can take out the previous highs around $40 then it might continue to provide gains but I think we can find more interesting names.
Seemed like earnings provided most of the moves today and WebMD (WBMD) was no exception gaining over 25% after their report. Also moving higher on earnings and to the tun of over 22% was Aruba Networks (ARUN). It was not all fun and games as Merit Medical (MMSI) and World Fuel Services (INT) lost 15 and 10% respectively after earnings reports that didn’t wow the street.
Week in Review:
Monday the markets were closed in observance of the Martin Luther King holiday.
Tuesday I didn’t provide a Daily Wrap as I was traveling back from the NYC Trader’s Expo.
Wednesday saw some mergers in the news as Office Depot (ODP) and OfficeMax (OMX) officially confirmed a story from the Wall Street Journal over the long weekend noting that a deal was close. Another merger or maybe better to say takeover in the news was NetSpend (NTSP) which closed up $3.52, or 28.64%, to $15.81 after agreeing to be acquired by Total Systems (TSS) for $16 per share. A large cap name reporting earnings and downbeat news was Caterpillar (CAT) which announced that global retail machine orders were down. The news of the day was the FOMC’s January 29-30 meeting minutes which indicated that several Fed members were starting to think about altering the current bond buying strategy. This helped press the market lower.
Thursday’s focus was on a slew of economic data including a Jobless Claims number that came in higher than consensus estimates (362K vs 353K). A stock that I had been watching based on the technicals was VeriFone (PAY) which came our with disappointing earnings and gaped much lower on the news and a few downgrades. This stock I highlighted as a reason why I do not play earnings or more specifically I do not swing trade into earnings. I will generally wait for earnings to happen and then take a position. I also noted Tesla (TSLA) gaping lower on earnings and while TSLA is a name I like because I think the management made some good decisions including the licensing of some of their platforms and technology to other car companies, that doesn’t matter for technical trading and I would let the stock digest some before looking at the name again for a trade.
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. Also in that section are Dividends and Splits.
Major averages 5 day results:
Dow Jones Industrial:
S&P 500:
Nasdaq:
My stance of late has been to continue to play patterns that are setting up well (especially to the long side) but upon closing out a past trade I would scale down my size into the new trade as a way to stay engaged with the markets but also limit my risk. Even with the back to back down days we had in the market, my stance remains the same. The only other change I might now make is that while I prefer stocks off somewhat of a bottom I did not specifically note any preferred patterns. Now I might avoid the names that have run a lot and while maybe flagging are likely pushing for the last pop. Sometimes these names do not get that pop if the market drags them down. I might prefer to stay with names off a bottom that I feel could be apart of a sector rotation or just beaten enough that they will outperform even if the market faces some trouble. For the S&P, Friday’s rally was not a shock off support but I still am watching to see if we retrace to some lower levels before ultimately then making another run.
