The S&P battled back from a lower open to finish narrowly in positive territory, continuing the digestion we have seen over the last two weeks. Volume also remained very light. The low of day on the S&P 500 ETF (SPY) was $146.20, which is right above the 8-day moving average. Strong trends often ride above their 8-day MA's. The Nasdaq finished narrowly negative thanks to weakness from Apple (AAPL).
The market rallied pretty much the whole day after the down open, but there wasn't any significant momentum to write home about. The important resistance pivot on the SPY still stands at $148.11. While the market may not be terribly exciting for day traders right now, swing traders are pleased with the constructive consolidation we are seeing. Even for the momentum fiends, there has been selective action if you are at the right place, at the right time.
Facebook's (FB) surprise event turned out to be a "sell the news" type event like many expected. Speculation about the gathering ran rampant over the last couple weeks, some believing the company would announce a phone despite CEO Mark Zuckerberg's insistence that hardware is not in the company's future. The most likely scenario appeared to be a 'search'-related announcement, which came to fruition in the form of "Graph Search." Facebook is not trying to directly take on full internet-based Google (GOOG), but instead build search around your Facebook network so the results are more relevant to you. FB also announced a partnership with Microsoft (MSFT) that leads any search that yields no result on an individual's Facebook network gets routed to the company's Bing search engine. FB finished the day down 2.74%.
There were a number of sympathy trades on the Facebook news. MSFT surged 1.19% on the news of the partnership with Facebook. Google (GOOG) initially spiked towards the beginning of the event before the news of the Bing deal was revealed, but pared gains to finish up only 0.23%.
The new Facebook Graph Search could help individuals get restaurant recommendations more easily from friends, and investors viewed that as a major threat to Yelp! (YELP). As a result, YELP traded sharply lower, finishing the day down 6.19%. Many surmised the news could also lead to Facebook becoming a more effective professional networking tool, but LinkedIn (LNKD) seemed unconcerned by the news as it finished up 0.33%.
The banks helped lead the market higher today as most of the big names in the sector report earnings in the next few days. JP Morgan (JPM) and Goldman Sachs (GS) report tomorrow morning. Bank of America (BAC) held its 21-day moving average again.
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*DISCLOSURES: Scott J. Redler is long MSFT, DELL, CAT, GE, GLD, BAC, TBT, DANG, ZNGA, INTC, VMW, F. Short FB, HPQ, SPY.