Archive for July, 2012

Quiet Trade – Premarket Stock Talk

PFE beats, HUM and COH disappoint.  AAPL breaks out over 600, and we highlight some critical resistance levels in CVX, XOM, and JNJ.  Full premarket analysis:

We apologize for the audio difficulties today.

Will the break-out continue? Premarket Stock Talk

Moody’s gives some cautious comments in response to Draghi.  But will the market shrug it off? We analyze the technicals in AAPL, XOM, CVX, MSFT, T, and GE.  We also discuss the CBI – SHAW merger.  Full premarket analysis:

S&P Futures Support and Resistance Levels

Can the bulls keep control?  Or will we give back these gains once again?  Headlines will continue to drive this market, but we still need to be cognizant of the technical levels.  If you subscribe to the theory that old resistance becomes new support than the 1373.75 – 1376 area is a key level for this market to hold.  Here is a look at the critical levels:

E-Mini  Significance Level Reason
1407.75 *** April 3 high
1402.50 ** April 4 high
1398.25 ***** May 2 high
1394.00 *
1391.00 **
1386.00 **** Friday high
1382.50 CLOSE
1376.00 **
1373.75 ***
1368.25 *
1362.50 *
1360.50 *** Friday intraday low
1358.75 ** Thursday high
1352.75 **** Fri Globex low-1354.75 Thurs close

For support/resistance levels on the S&P’s top components click here.

S&P Break-out? Weekly Technical Outlook

Just when you thought the S&P 500 index was going to crack the major support at 1320, Mario Draghi comes to the rescue.  In this headline driven market, sometimes just a simple comment can cause the market to explode.

Perhaps Draghi is a skilled technician and realized the importance of holding the bottom part of the recent trading range and decided to give the market a spark, while his combatant, Angela Merkel, was beginning her vacation.

Now with the Federal Reserve Bank meeting this week and the threat of another round of monetary easing on the horizon, who wants to be short this market?  No one.  Unless you get a sharp reversal Sunday night in the futures, expect the index to gravitate towards the 52 week and multi year high of 1413.25.  If the market hears what it wants from the Fed, that level may even get taken out.  If the Fed disappoints the market, expect major support at Friday’s low of 1352.75.

Apple (NASDAQ:AAPL) disappointed the street’s and its own lowered expectations for earnings and came out relatively unscathed for such a large miss.  Of course the after-hours junkies beat it down to 565 immediately following the release, but during the more heavily traded day session it was unable to breach 570.  In fact, AAPL put in a double bottom on Wednesday (570) and Thursday (570.36) and with a slight stretch, a triple bottom on Friday (571.59) before being sucked into the buying frenzy on Friday.  Most likely, there will be nothing but air in this issue above Friday’s high of 585.83, and it could run up to the 600 area, filling the gap from the earnings faux pas.  On a pullback, AAPL should find buyers at the double close area from Wednesday and Thursday (575), and long term players should not fret until the major support at 570 is taken out.

Look who is knocking on the door of a new 52 week high, Exxon-Mobil (NYSE:XOM).  After delivering solid earnings, followed by the same from its brethren Chevron Corporation (NYSE:CVX), XOM will surely challenge 87.94 and the institutional sellers at 88 this week.  Keep in mind, this will be XOM’s third attempt since April  to crack this crucial level, so it may take a day or two to achieve it.  Above 88, you may find some stray sellers at 88.23, the high back in February of 2011, but after that level it is wide open until the July 2008 high of 89.63.  Buying a pullback, besides to cover a short scalp, could be tricky since there is no major support to lean on until the double bottom from the Thursday (85.28) and Friday (85.50) lows.

International Business Machines (NYSE:IBM) is humming once again.  After filling the gap from its earnings announcement and making a double bottom on Monday (188.20) and Tuesday (188.56), IBM crept up on Wednesday and exploded on Thursday and Friday with the broad market.  Although it retreated a bit from the high on Friday (197.41) to close at 196.39, IBM is poised to test major resistance at the double top from June 19th (199.99) and June 20th (199.74).  Of course there will be High Frequency Traders swarming in front of the institutional sellers at 200, so wait for a day when IBM gets a running start (previous day’s close at 199.50 or better) to play a break out through that crucial level.  Major support can be found at Friday’s low, which was also Thursday’s close at 193.95.

If you are scouring the Big 10 for a sleeper stock that has yet to fully participate in the recent rally Microsoft (NASDAQ:MSFT) may be your top candidate.  After slipping under major support at 29 earlier in the week, the MSFT bulls did not allow that to happen on Thursday (29.09 low) or Friday (29.18 low).  After a big up open on Friday, MSFT floated down to almost Thursday’s close (29.16) and then took off, easily clearing the minor resistance at 29.50 and closing well above that level at 29.75.  MSFT, which has been all over the map since its recent earnings announcement (28.78-31.05), has rid itself of some naysayers and may easily fill the gap up to 30.05 from June 20th.  After that level, there is not much in the book until you reach the June 20th high of 31.05.  Expect MSFT to be stacked with large bids all the way from 29.25 down to 29.00 if for some reason it decides to retreat.

If MSFT does not attract your interest, how about General Electric (NYSE:GE)? Has the sleeping giant finally awakened?  This issue, which has come nowhere near its 2008 high (38.52), finally has some upside momentum.  With GE still yielding 3.25%, it continues to be an attractive candidate for yield seeking investors.  With such a strong close, it will take early aim at the large institutional sellers at 21 and may take them out.  After that level, there is minor resistance at the March 1st high of 21.17.  Above that level there is no major resistance until the high from late February of 2011 at 21.60.  Expect minor support at Friday’s low (20.56) and major support at Thursday’s low of 20.16.

Chevron Corporation (NYSE:CVX) continues its assault on its all-time high of 112.38 and all time high close of 111.31 back in March.  Once again, stellar earnings which the company alluded to a few weeks back has been the driver.  While trading as low as 104.60 on Tuesday, CVX rallied almost five points to close just off its high for the week (109.50) at 109.26.  Once CVX clears the March 20th high of 109.93, along with the institutional sellers perched at 110 and the HFT contingent that accompanies such institutional sellers, there is very little resistance until the mid-March highs of 111.06 and 111.31.  As in XOM, buying CVX on a pullback will not be an easy task since there is no major support until the double bottom from the Thursday (107.26) and Friday (107.13) lows.

Say hello to the new Treasury-Bill, AT&T (NYSE:T) , still yielding 4.74% even after this huge rally.  After blowing through the 52 week high (36.21) on Thursday, someone had an inkling that there was some good news coming out on Friday, as it continued to march another 84 cents (very unusual for this issue).  And low and behold on Friday night, they increase their buyback plans by another 300 million shares.  Why they would choose to do this increased buyback at this inflated level is beyond me.  I guess they still believe the stock is undervalued at its current level of 37.14.  For those looking to short this issue, be careful, since there is no formidable resistance until the June 2008 high of 39.91.  Expect minor support at Friday’s low (36.44) and major support at Thursday’s low (35.83).

Johnson&Johnson (NYSE:JNJ) closed within 20 cents of its 52 week and multi-year of 69.70.  There are some large institutional sellers at 70, and expect HFT resistance all through the 69.90’s as the HFT players lean on those institutional sellers.   Once it clears that level, there is no major resistance until the September 22nd high of 70.71.  After that level expect a few more sellers at 71 and no major resistance until the September 19th high of 72.69.  On a pullback expect minor support at Friday’s low (68.89) and major support at the weekly low of 67.

One of the few bank stocks at a 52 week and multi-year high is Wells-Fargo (NYSE:WFC).  With Friday’s close (34.19), it is within 40 cents of its 52 week high (34.59), and within one point of its November 2008 high (35.08).  But with all this resistance, it has been slow going on rallies.  However, with a firm close over 34, WFC will not have as far to travel to take out the big offers all the way up to 34.59.  After that level, offers will be stacked at 35, just ahead of the critical level of 35.08.  Expect minor support at Friday’s low (33.85) and major support at the double bottom from Tuesday (32.95) and Wednesday (32.99).

Despite some disappointing news on the trials of their new Alzheimer’s drug, Pfizer (NYSE:PFE) still managed to make a new 52 week high of 23.94, before falling back slightly to close at 23.83.  Next up on the radar is the institutional sellers at 24 and the January 2008 high of 24.24.  Expect some profit taking ahead of the July 31st earnings announcement as investors attempt to cash in on this monster run from the 22 area less than three weeks ago.  In case of disappointing earnings, expect minor support at Friday’s low (23.51) and major support at the double bottom from Tuesday (23.07) and Wednesday (23.10).

Since I started publishing my Weekly Outlook for Seeking Alpha, this is by far my most bullish article.  From a technical perspective, the September S&P 500 Index futures have cleared a critical resistance level (1376) and closed above it (1382.50) by 6 points, which sets the stage for a test of the yearly highs. But if my super rosy, CNBC like bullish scenario is going to come to fruition the index must maintain 1376.  If not, we could simply be looking at a slight extension of the recent trading range that has persisted for the last two months.  With the Fed meeting on Wednesday, and July’s unemployment data due out on Friday, the headline news will continue to be your major market driver.

Joel and Dennis’ Hits and Misses

A wild week on the markets, it looked ugly early but thanks to Draghi, the bulls have taken control.  We’ll recap our good calls and no-so-good calls:

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