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Futures are up small ahead of what will be a very busy economic news front during the next few sessions. Today at 7:00 AM we had Mortgage Applications, 8:15 AM ADP employment report, 8:30 AM GDP, and then at 2:15 PM ET we have the Fed rate decision.
The broader indices have been creating an upper-range type channel as the markets have held higher over the past 13-14 sessions. The S&P has been holding above 1670ish letting the 8- and 21-day moving averages to play catch-up after a 5% correction in June. The question is, can we continue into August and break that 1700 level with some authority, or will it take more time?
I think we will know a lot more by Friday's close. It's a bit tricky as nobody wants to get caught in a Nikkei style move where it was hovering for multiple sessions then broke upper support and lost almost 6% in a few sessions.
So with that said, be light on your feet and be armed with levels. If we get a 30-60 minute close above 1693, you could start cheating with more risk on (especially if we get a daily close above) for a potential move back to 1698-1700. If we get a 30- or 60-minute close below 1680ish, then you could cheat with some "risk off," (or short) and then see how we handle the lower end of the channel around 1670ish. It really all depends on your time frame and how active you want to be. I believe it's a matter of "when" not "if" we hit 1700 this year.
July has been filled with lots of two-way stock action and great technical movement. As the indices traded sideways, earnings reports provided a catalysts for many names to have multiple-day moves through action areas.
In today's Morning Call we will go over the ags in the sector spotlight.
The ags got crushed on that Russia's Uralkali Group, the world's largest fertilizer producer, set potash stocks reeling Tuesday by pulling out of a cartel and vowing to ramp up production, a move that threatens to crash the $20 billion-a-year market by 25-50%. Uralkali said it's ending its joint venture with Belarusian Potash Co.
Overall, there could be some tactical opportunities vs. yesterday's lows or highs if you weren't caught in the mess.
PotashCorp (POT) plunged 16.5% after the news yesterday. The stock opened sharply lower at $29.22, then rallied up all day to fill a small portion of the big bearish gap. Active traders have some new levels to watch: yesterday's low of $29 would be key support. Yesterday's high of $31.89 could be the new pivot point to trade around. The gap gets fill at $36.
CF Industries (CF) saw a 11.8% spike Monday after Dan Loeb's Third Point Management revealed a position in the stock in its quarterly investment letter. Because CF Industries has access to low-cost North American natural gas, it has a structural and sustainable margin to competitors, Third Point said. After the news yesterday, CF retraced 2.5% as it has less potash exposure than its peers in this industry. A break below yesterday's low of $196.25 could bring in more sellers. Next support is sitting at the 100-day at $187.50.
Agrium (AGU) also opened sharply lower on Tuesday morning but the stock found some support from prior pivot low at $83.80ish and rallied off of this support level to go as high as $88.50. The stock did a great job erasing its overnight losses. It might need some time, but $83.50ish remains to be key support level.
Mosaic (MOS) took a big dip as the stock dropped 17.67% to $43.81. Yesterday's volume of 61.29 million shares was the highest in the stock's history. MOS put in a low of $39.95 then saw a snap-back to fill a small portion of the gap. It went as high as $44, which could be our new point of reference to watch.
High beta tech stocks continue to provide two-way opportunities
Apple (AAPL) saw a nice three-day move up to briefly touch its resistance level of $457 where it experienced some profit-taking. It was a great move from $435, as it gave us multiple calculated entries along the way. Some digestion above $450 would be constructive for higher prices moving forward.
Netflix (NFLX) continued to get selling pressure from its 8-day moving average as sellers stepped right off the open during the last few sessions to push the stock down. The $240 price point is the key support level to watch. A break below this could suck some air out of it. However, last time it saw the same type of action on June 28, it rallied the next day. At this point, measure its short-term composure with levels and have a plan as the stock could move fast.
Amazon (AMZN) continued to retrace lower after seeing a potent move on Friday. It had some downside follow-through and went as low as $301.57 yesterday. There is some support at $300-301, and that level needs to hold to keep this upper range intact.
Google (GOOG) met some buyers yesterday and rallied almost 1% to $890.92 after five days of rest. It's nice to see it find some footing at $880.80 area. Next resistance area to watch is $896-900, and a close above this area could get this stock moving again.
LinkedIn (LNKD) is resting above its 8-day MA ahead of its earnings. The stock has seen a constructive rally since June 24th lows as it continued to stay above the 8-day. LNKD is reporting after the close tomorrow. Consensus EPS is $0.31.
Tesla (TSLA) saw a Red Dog Reversal at $135.37 yesterday after seeing two days up. The negative Citron article added some fuel to the sell-off. Overall TSLA provides great two-way action. It found some support at $128.18 and held above its 8-day moving average yesterday. The chart still looks good, active traders could embrace the pull back to get involved with better prices.
Green Mountain Coffree (GMCR) briefly breached the short-term resistance of $76.33 with a potent rally right off the open, but met some sellers at $77 area. It could be Day 1 of a potential move. As long as it holds above $75.50 intra-day support level from yesterday, it could see some continuation above $77 today.
Facebook (FB) has been a rock star as it tacked on another 6.2% to go as high as $37.96 yesterday. It has filled the gap from its post IPO day and the next resistance doesn't come in until $45.
Las Vegas Sands (LVS) reclaimed its 50-day on a nice move up yesterday as the stock gained 2.6%. The stock looks poised to see higher prices as a break above current resistance of $56.50 could bring in some buyers.
Watch the metals today as well.
Gold (GLD) has a very tight pattern. It's digested the recent move after the "blood on the Street" July 28th lows. GLD tends to be whippy on Fed Day and $128.75-$129.50 is the next action area. A trade through it could bring some action back. It sometimes does a fake out, so the close will be important. Important support stands at $126.80ish.
The Inverse Bond ETF (TBT) range is getting tight. It consolidated well in this upper range and $76.00-76.50 is the action area. A trade through and close above this could get it back and above 2013 highs of $77.59.
*DISCLOSURES: Scot Redler has no positions