Monday: Bitcoin to the Rescue
Bitcoin can be a negative and positive catalyst for the stock market. Over the weekend and Monday it was both. On Sunday, it neared the low from last week ($30K), but found buyers just under $32k and staged a huge rebound to $39K area (going from down $3K to up $3k).
As traders braced for a risk-off day, the rebound in the cryptocurrency reinvigorated the markets insatiable appetite for risk. After grinding higher in the premarket session, the S&P 500 index made quick work of last week’s high (4185), made on Friday, and charged into the 4200 handle.
The index was higher by 47.50 points and posted its third highest ever close at 4199.25.
Featured stocks of the day, along with the semiconductors iShared Phlx Semiconductor Index, ETF (NASDAQ: SOXX) which where were boosted by proposed $53B infusion from the government to improve chip supply were Virgin Galactic (NYSE: SPCE) and Callaway Golf
Virgin Galactic shares went into orbit following its third successful test flight into space. For the day the issue added $5 or 24 percent, rallying from $21.07 to $26.89 or nearly 25 percent.
Phil Mickelson kept the momentum swinging to the upside in Callaway Golf as the surprise winner of the PGA. The company sure got their “bang for their buck” for sponsorship as he showcased their clubs and sported their emblem non-stop for fours days on worldwide television it came withing penneis of making a new all-time high ($35.51 vs. $35.51) but was unable to post a new all-time closing high ($34.86 vs. $35.11).
More on Callaway Golf: https://tinyurl.com/nvnv7s5j
Tuesday: Top of Trading Range or Breaking on Through to the Other Side
The overnight and premarket price action indicated that the push higher would continue. However, after failing to breach the premarket high early in the session, buyers turned to sellers. The index ended the session on the low in the red by 14.50 at 3185.50.
One of the culprits for the failure of the rally is Amazon.com (NASDAQ: AMZN). The third largest component of the S&P 500 index peaked in the first few minutes of the session and reversed course. Interestingly, the sharp move lower in both the index and Amazon was instigated by the Washington D.C. attorney general who has filed an antitrust lawsuit against the company. The lawsuit is against company policies that prevent competitive pricing on its platform.
Despite the government scrutiny. Amazon was higher on the day by $14.06 to 0.65% at $3259.05.
On the upside, the always volatile Moderna Inc. (NASDAQ: MRNA) got a boost when it announced their TeenCOVE study of its COVID-19 Vaccine showed no cases Of COVID-19 after two doses of the vaccine.
The issue closed the session higher $5.09 or 3.2% at $169.26
More on Moderna: https://tinyurl.com/rs984ec6
Wednesday: Should I Stay or Should I Go Now?
Once again, the overnight gains in the S&P 500 index evaporated off the opening bell. However, it did find support in the same area as in Tuesday’s session, finding buyers just above Tuesday’s low (4179.25), only reaching 4180.50 and staged a rebound.
For the second day in a row, the index traded in a much less expected range ending the session higher by 7.50 points at 4193. Also, the limited range did not exceed Tuesday’s high or low for an inside day.
Earnings reports from the “reopening” stocks continued to surprise to the upside with a monster beat from Dick’s Sporting Goods (NYSE: DKS). The issue obliterated its former all-time high ($91.80), reaching $99/70 and posted a new all-time closing high by a wide margin ending the session higher by $13.83 or 16.4 percent at $98.40.
More on Dick’s Sporting Goods: https://tinyurl.com/pt2htuzf
Zscaler Inc. (NASDAQ: ZS), a security-as-a-service firm that offers its customers cloud-delivered solutions for protecting user devices and data posted a solid quarter. It is one of the beaten-down ($230.88 in February to $157.03 this month), high forward price to earnings (294) growth stocks attempting to mount a comeback.
The company reported quarterly earnings of $0.15 per share which beat the analyst consensus estimate of $0.07. Also, the company reported quarterly sales of $176.40 million which beat the analyst consensus estimate of $163.71 million.
After a much higher open, it had a brief retreat to $191.50 and then resumed its move higher. However, it did find resistance in a familiar area, peaking at $199.70. That high matched a pair of daily highs from April 13 and 17 at $199.50.
Profit takers came in heavy after the issue peaked but it still ended the session higher by $21.46 or 12.4 percent at $194.20.
Thursday: Key Support Area in S&P 500 Index (4180)
The range bound trading in the index continued for the third day in a row. Instead of strength in the Tuesday’s night session, which is actually considered Wednesday’s price action, the index retreated from its closing price (4193. However it found support in a familiar area, just under the pair of lows from Tuesday (4179.25) and Wednesday (4180.50) at 4177.75.
It crept higher during premarket trading and had an extra boost when the New York Times released details of Biden’s new infrastructure plan. The rally of the open, came up just shy of Monday’s high (4212.75), only reaching 4210.
For the choppy range-bound session, the index was higher by 6 points at 4199.
The short squeeze in AMC Entertainment (NYSE: AMC) and garnered huge momentum when it breached the previous high for the move ($20.36). Miraculously, it rallied all the way to $29.76, which the issue has not seen since it peaked in April 2017 at $30.55.
For the session, AMC ended higher by $7.17 or 31 percent at $25.73.
The rebound in the growth sector continued with a wild session from Snowflake Inc. (NYSE: SNOW), In a dramatic fashion the issue went from $11 in the red to $11 in the green 6 ending the day higher by $9.90 or 4.2 percent at $245.15.
More on Snowflake Inc.: https://tinyurl.com/mt8c9hb3
Friday: Key Resistance Area
Once again the overnight price action faded off the open. After making a new high for the week in the premarket (4217.50 vs. 4212.75), there were sellers off the open. However, the retreat found intraday support ahead of the close (4199.00) at 4201 and ended the day higher by 3.5 points at 4202.50.
The index had an extremely tight range over the last four sessions of 40 points, which was far below average expected trading ranges. For Friday the index added 3.50 points to close at 4202.50 and ended up with a gain of 53.75 for the week.
There were plenty of movers besides the “meme” stocks. The growth technology sector continued to impress with Salesforce.com (NYSE: CRM) posting a Q1 beat on both the top and bottom line.
The company reported quarterly earnings of $1.21 per share which beat the analyst consensus estimate of $0.88. Also, the company reported quarterly sales of $5.96 billion which beat the analyst consensus estimate of $5.89 billion.
That instigated a solid gain on Friday of $12.27 or 5.4 percent closing at $238.10.
Dell Tech Inc. (NYSE: DELL) had a Q1 beat on both ends as well, but was not able to move out of its 32 day trading range ($93.97-$103.80). It ended the day lower by $1 or 1 percent at $98/70.
More on Dell Tech Inc.: https://tinyurl.com/b85fed8
The Week Ahead
For shorter-term options players, the premiums will be evaporating quickly due to four-day trading week.
The Q1 earnings session continues to wind down:
Tuesday, June 1, 2021
Before Market Open
Canopy Growth (NYSE: CGC)
After Market Close
Hewlett Packard Enterprise (NYSE: HPE)
Zoom Video Communications (NASDAQ: ZM)
Wednesday, June 2, 2021
Before Market Open
Advance Auto Parts (NYSE; AAP)
After Market Close
Net App (NASDAQ: NTAP)
Splunk (NASDAQ: SPLK)
PVH (NYSE: PVH)
Thursday, June 3, 2021
Before Market Open
JM Amuxkwer (NYSE: SJM)
After Market Close
Broadcom (NASDAQ: AVGO)
Docusign Inc. (NASDAQ: DOCU)
Lululemon Athletica (NASDAQ: LULU)
Crowdstrike Holdings (NASDAQ: CRWD)
Technical Take on the S&P 500 Index
The bulk of last week’s gains came on Monday (4151.75 to 4199.25) and the remainder of the week was consolidation station. Support in the index is very well-defined with a triple bottom.
(Tuesday-Thursday) at the 4180 area. The daily highs for the week were more spread out, but the high for the week that was made on Friday (4217,50), will be bogey on the upside to clear in order to make a new all-time high.
It may be another few days of trading ahead of Friday’s all important unemployment report.
Issue With Upcoming Catalyst
It is important to monitor the price action of an issue ahead of major catalyst. Next Monday, June 7. Is the FDA’s deadline to approve or delay Biogen’s (NASDAQ: BIIB) main drug in the pipeline, it’s Alzeiheimer’s disease therapy, Aducanumab.
The issue has had violent swings off each announcement and mostly to the downside. As of Friday, the issue is trading almost 50 percent lower than its all-time high made in March 2015 ($480.18). It should be noted that this is the first time the company trial results on the drug that exceeded expectations.
Biogen has traded lower in its past six sessions, falling from $283.19 to $267.48 may indicate optimism on approval is waning. For the optimists on the company, it has put in a triple bottom at the $266 area.