Thursday, January 30, 2014

Shoot Out

The stock market had a nice rally today because of the following factors:

1 - Blowout earnings reports from FB & UA, plus great biotech news from ALXN. All made new highs on huge moves.

2 - A successful test of support by the major indexes yesterday.

3 - End of month markups by institutions. These markups may not happen tomorrow as the institutions play this dumb game of trying to hide the markups on the last day of the month from our sleeping SEC.

4 - Speculation on GOOG & AMZN earnings.

After the market closed, GOOG & CMG made new highs based upon their earnings and guidance. AMZN fell 25 points from its highs of the day. All three stocks had wild price swings before settling in on a price trend.

Here are charts of some of the leading stocks:


AAPL I opted to cover the last half of my AAPL pre open at $500.05. It looks like AAPL could hit its 200 day moving average around $475 - $480, but I chose to cover because the market was rallying and AAPL was losing downside momentum. When in doubt, get out!





ALXN popped on great earnings and drug news. I need to learn more about this stock. I don't want to chase instant lottery winners unless I know the story cold - especially in this uncertain market.



BIIB made a new high and I got back in. If the rally continues, I think BIIB can go to $125 - $130 on this leg



CMG broke out after the close on great earnings. Note how CMG just blasts through the highs without really completing a base. Very expensive stock, but blasts as the shorts get squeezed even in this environment.





CNQR Beautiful breakout, but how does one chase this stock in this nowhere market without learning the story? I have to get up to speed.




FB Great breakout on outstanding earnings report last night. Can FB continue to run like it did after it gapped up three months ago - circled on chart - from FB's first great upside surprise earnings beat? I am trying to hang on and bought some options into the morning dip. Unfortunately, the options rapidly lost premium during the day. That plus the slow erosion in price from the gap up, negated much of my gains from my stock purchase the night before. During the bull run last year, stock options held their premiums during extraordinary one to three day up moves.




GOOG No base and not great earnings. But under the surface, the market liked what it heard about business going forward. That plus FB seemed to be enough to make GOOG pop.




HAR keeps putting out great reports, but the last three reports resulted in one day wonder moves. Difficult to trade.




UA looks like it is kicking NKE's butt. Great earnings and after a consolidation it looks like it has a good chance to run into the next earnings report if the market rallies. I am having a hard time grasping the significance of UA. Is it just a garment company or really a technology company as Jim Cramer says? I have no answers. 

 
 
Here is the S&P 500 Tic Chart for the day. Note how after the gap up open, the index ended up going close to sideways the rest of the day. Then the SPY & QQQ sold off after the close.



In closing, the stock market has changed once again. All of a sudden there are some stocks blasting to new highs as the rest of the market lags. Are we going to get a market in gear with all stocks running, or is this just a bifurcated market? From my perch I view this as the latter until I see more evidence. I think that one has to pick one's shots until the overall market situation is clarified. Until then I still say "red light" unless one sees special situations. The fact that a bunch of stocks are running is positive. The fact that the averages are lagging, sentiment stinks and monetary policy is strange tells me to be cautious. Lastly, the violent nature of the moves of the select elite stocks is downright scary.






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.
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