Wednesday, January 29, 2014

Holding The Fort So Far

Today the bulls and the bears were engaged in a battle at support levels for the major indexes. It was quite a back and forth battle, with support slightly penetrated several times before finally holding and bouncing back a little bit.

The foreign currency crises and the Fed continued to dominate the action. Today it was Turkey that rattled the markets. In addition, the Fed decided to taper as expected. Lastly, FB reported great earnings after the close.

Here is the $SPX tic chart. As one can see, the index gapped down at the open, rose into the Fed announcement and then fell down to support after the Fed announcement. Then the aforementioned battle at support began with the bulls winning at least for today.

$SPX  One can see the support battle line more clearly on the one year chart. I am not so sure that this battle is over yet. Nevertheless, I covered my SPY short at 177.13 when it became apparent that support was holding today. I would not be surprised by a bounce attempt here. And I have set my price alert at today's lows as the point to reload my short position.

FB Facebook had blowout earnings after the close and broke out to an all time high. I waited to see how the conference call went because I view FB as a utility that is increasing it's earnings because of greater Advertising revenues - especially in the mobile area. My concern is whether subscriber growth is slowing even as FB is finally monetizing it's existing subscriber base for profits. There was no clear answer to the "FB is not cool anymore" issue during the call. I bought FB around $58.50 when it became apparent that the call was good and that the stock was breaking out.  I am keeping a tight stop on FB.

In other trading I covered one half of my AAPL short for a nice profit and will see how it does around the $500 level, which it pierced and bounced back from several times. AAPL does not trade in sync with the market, so maybe my cover was spooked by the fight by the indexes by support. We shall see soon if I was early, but it feels good to lock in some profits in the SPY and AAPL shorts.

In sum, this market still makes me skittish and I still want to pick my shots judiciously.  I am still playing small and will only go long special situations like FB. I am not going to get caught up in a buzz saw market until stocks start to act better. The Fed is sticking to tapering for now and we shall have to wait and see how the US economy and world currency and market situation plays out.

BIG Capital Advisors and Seaview Partners are not responsible for your investment decisions. We believe very strongly in our opinions, but you must perform your own due diligence in making your investment decisions.
Post a Comment

Google Search