If you haven't heard, today is Fed Day. The FOMC will announce its rate decision at 2pm ET, followed by a press conference from Chairman Ben Bernanke. The US central bank is expected to stand pat while talking more seriously about QE tapering as early as September's meeting. The market has bounced twice off the 50-day moving average leading up to the announcement, suggesting perhaps that investors are not overly afraid of a slower pace of asset purchases.
US stock futures were following through on yesterday's strength early this morning, but have faded back to near the flat line. Europe markets are slightly negative while Asian markets are mixed. China has been a recent soft spot, Japan's Nikkei is now almost 7% off its lows after another gain of 1.83% today.
Yesterday many expected the market to quiet heading into the potentially market-moving Fed decision, but the S&P was able to break higher out of the wedge pattern and downtrend that has been in place since the May 22nd outside day. The S&P broke above the 1642-1648 level and now the question is whether we will extend above it. The next resistance level to watch is 1658-1662 and then 1674, with the intraday high at 1687.
Fed days are often tricky as you sometimes see multiple fake-out moves leading up to and after the decision. Many times you get the cleaner move after 3PM ET once the chop works itself out. Overall I do feel the market is comfortable with a scaled-down version of QE; I think most expectations are for pace of purchase to go from $85 billion per month down to $50-60 billion in September.
Tech stocks were some of the most lively over the last few sessions, providing some opportunity even before today.
Google (GOOG) saw a nice four-day move after putting in a higher low on Thursday last week. The stock broke above our listed buy price of $891 and went as high as $900.79, closing on highs yesterday. It's not a spot to chase up here, but I think most dips on GOOG are buyable. At this stage, it would be healthy to see some consolidation above $888-891 to pave the way for a potential move back to all-time highs.
Amazon (AMZN) saw nice upside follow-through yesterday as it tacked on another 1.32% and briefly break above the prior pivot high of $282.47. The stock has room to all-time high at $284.72. AMZN has been in-play since its potent breakout at $272 on June 7, so keep this trade on your radar.
LinkedIn (LNKD) is flagging nicely after seeing a nice two-day up move on June 13. The stock reclaimed its 50-day MA and closed above it yesterday, as it looks like it's setting up for another igniting move to the upside. Above yesterday's high of $181.90 it could get some additional buying interest.
Netflix (NFLX) held above its huge gap up on Monday, showing commitment to the move. The stock took a break yesterday but it put in a higher low at $226.40. The longer it holds above this gap, the higher probability we could see some additional upside momentum.
SanDisk (SNDK) has been highlighted the last two nights in our Off the Charts newsletter on Monday as it showed relative strength on a breakout. Right now it's hard to chase, but we could see upside follow-through above Monday's high of $61.70. It went as high as $63.37 yesterday to clear a major resistance level on the weekly chart. The stock has room to $65.50, which is our first target to the upside now.
Hewlett-Packard (HPQ) is setting up for a break out above $25.50 as we have mentioned this name many times for the last few days. It had a powerful pro gap on earnings on May 23, and has built a constructive upper level base. Watch HPQ for a potential momentum breakout.
In the Morning call we will also go over set-ups and opportunities in the banks.
Goldman Sachs (GS) is hovering around its 8-day MA to digest the recent big move from $137 to $168. The chart still looks good as it's holding above the prior breakout level of $159. The longer it stay above $162ish, the higher probability we could see it takes out the current high of $168.20. If we get the Fed out of the way today without any curveballs, GS could be the first one to get some momentum as its pattern is getting tight.
Morgan Stanley (MS) is also building an upper level wedge above its 8- and 21-day MAs. A break above $26.50ish could resolve this range to the upside.
JP Morgan (JPM) is also trading in an upper wedge with the downtrend resistance in place since May 31. If it can get above $54.27, we could see some additional volume and buyers step in.
Bank of America (BAC) has continued to hold higher since Thursday last week and broke above its 8- and 21-day MA yesterday. BAC showed some relative strength yesterday, so potentially look for continuation above yesterday's high if the market can get through today's Fed announcement unscathed.
Citigroup (NYSE:C) is the laggard in this group since negative news a early last week, and is trading in a descending channel. C is trying to build a base above $49. A break and close above its 8- and 21-day at around $50.30 could put it back in motion to the upside.
Wells Fargo (WFC) has been consolidating at upper levels for the past month and holding above its 21-day MA, showing commitment. The bank broke and closed above its 8-day MA yesterday.
General Electric (GE) broke out of the monthly consolidation on news of its new Industrial Internet project. It closed above prior pivot high of $24.13, showing impressive strength for a stock that often finds its hard to make big moves. It would be healthy to see it do some work above the breakout level of $23.95. Look for continuation above $24.45.
Tesla (TSLA) announced a recall of 800 of its Model S cars, which caused some sharp pre-market selling. The stock now looks to be bouncing pre-market, though, as the scope and severity of the recall issue is downplayed. Overall the stock has been acting well, and the longer it holds up the more nervous the stubborn remaining shorts will get. Let's see if it can go positive today and shake off the recal. Support to watch stands at $99.20, and then down at around $96ish. A close below $99ish could see TSLA lose some momentum.
Solar City (SCTY) is still trying to absorb some of the pressure from the lock-up expiration. The longer it holds up, though, the more inclined shorts could be to cover after they didn't get that cascade lower. The key short-term support level to watch is $35, if we close below that level it will need more time.
Metals have been trending lower most of this year.
Gold (GLD) gave you many chances to make adjustments on its way down. The first was around $161 back on February 11, the second was at $149ish on April 12, and now it's trying to hold recent support around $130.50ish. That support level will be very important going forward.
It's June and we're almost half way done with 2013. This market continues to reward participants on many timeframes, you just have to know yours and work on a process to get you where you want to go. Don't focus on the fear mongers, focus on the price action.
*DISCLOSURES: Scott Redler is long AMZN, BAC, GE, YHOO, TSLA, MGM. Short SPY.