Early Bird Report 6-7-12
A rate cut from China has sent the markets soaring in the pre-market (after they soared all-day yesterday), with the SPY’s now over 133. This brings us to the goofy area on the daily chart where on 5/29 we saw a fake move to the upside, which was followed by 4 sharp red candles. Yesterday’s action had the fingerprints of institutional money flow that was clearly concerned that they may be missing a near term bottom. We gapped up, paused (briefly) at a.m. highs, and then grinded higher all day with hardly any hiccups with a real screaming squeeze in the final minutes of the day…the buy side programs were in charge. Now that we have some actual news in the form of the China rate cut, it’ll be interesting to see how much more juice this rally has. I would have to imagine there would be some willing sellers (both profit takers and short initiations) into this gap after such a big two day run, but you never know…we’re still waiting to hear from Bernanke today. If we get another pop on the open in the SPY’s 133.93 is 5/29 high, and may offer some resistance.
News/Earnings Stocks (as of 7:30 a.m. CT publication)
Gapping Up– CACI UHAL SINA MDR AMRN SJM
Gapping Down — PLL MW SEAC HWD NAV LULU XNPT TITN
No indication — BV Z PBY ABM BNNY UTIW
Watchlist: This is a breakdown of stocks w/ certain technical characteristics in light of yesterday’s action, NOT a recommendation to Buy or Sell. Always consult your own registered broker/advisor before initiating any positions.
Under $10 range break long momentum looks with strong closes/actionable charts: S KEM BAC ATPG HGT WG
Over $10 long looks w/ strong closes/actionable charts coming out of a range: APOL DGIT ULTA BGS RE MRH DLTR VVC WWWW SO UNH HPP NTES SCG AME WFM CLX AWK LQDT MDVN KMB SXCI UA
Weak close/weak chart/downside range break: COH RAX TPX MYGN KMI CONN HAL BHI
GoPauseGo: OCN JASO MDCO COL VECO
Pocket Pullback (3-5 day orderly pullback from strong trend/move): GWAY SYNC
Up to 200d: VSH LAMR AAP KLAC BRCM SODA
Up to 50d: MSI INTU PGR UPL ETR AVB CHK EQY CPT DLLR SPG STWD KRC ENS MAS GGP CVA CMG LH
Up to 20d: MUR HOLX TEX NWSA C AVB PFG WDR CSC ADM AMT MRO KRC HSP RBA PHH GGP WRC VLO PAA QCOM UPS
Down to 20d
Down to 50d:
Down to 200d:
Current Positions in our Ditto Trade Mirrored Swing Account:
Long DDD from 22.05 (1/4 of original position remaining. Sold 1/2 at 26.90 and stopped out of 1/4 at 30.76).
Long SCSS from 20.40 (1/3 of original position remaining. Sold 1/3 at 21.40 and another 1/3 at 22.18)
4 ideas for today’s trading day:
These are ideas…. NOT recommendations. The idea behind this section of the report is to illustrate my thought process when looking at potential swing and day trades. Often times I trade these setups, many times I don’t…dictated by market tone for that day. Complement these ideas with your ownresearch before making any trading decisions. Always consult your own registered broker/advisor before initiating any positions.
1.) Breakout long: KMB
Bumping up into (and briefly over at the close) the $80 mark, which held as resistance twice previously over the past month. Been trading in a $2 range between 78 and 80 for the most part during that time, a decent r/r here if the market continues higher. Would use 79.50 for daytrades as the stop/ignore level, and 78 for any swings.
2.) Small cap / Sub $10 long: KEM
Fairly thin name here, the stock popped above a three -week consolidation off lows yesterday up past its 20d Moving Average on good relative volume. Not much resistance above on the daily chart as it tries to eat into the steep drop from early May, when it fell from $8 down to 5.50. Interesting to note that it does hold $4.69/share in cash on the books. Would be looking for a move back up to the 6.50 area as a first target. Any swings would want to take profits there, move up stops and look from 7.00 and 7.50 as targets #2 and #3. 5.75 would be the stop price, and if you decide to wait out the open and it finds itself below that price, you could ignore the trade all together.
3.) Pullback short: QCOM
Stock has had a nice 3-day bounce from $55, up to yesterday’s close at $58.40. This close area now finds itself at three-pronged resistance, however. It’s 20d, last month’s pivot resistance high of 58.75, and a TrendLine going back to late March 52 week highs. None of this matters if we see across the board buying like we did yesterday, but if the market can’t hold this gap higher, and QCOM can’t manage to stay above this critical level, it looks like a decent r/r short.
4.) Traditional short: KMI
Not real good action yesterday, closing near lows while the market was absolutely ripping higher. 31.75-32.00 area is support for the past few weeks, and was an old breakout pivot from late Feb. Likely tough to get a flush today w/ the big gap up in the market, but I’ll watch this for a short through that support level. Would only want to be short this name below 32…stop out/ignore if it trades above and/or market continues to rip higher.
The creation of this morning’s Early Bird Report was compiled while listening to the music of Japandroids
The Early Bird Report