US stock futures are set for a slightly lower open Monday morning following another week where indices stretched to all-time highs. The big headline over the weekend was an article in the Wall Street Journal from Fed expert John Hilsenrath, who suggested the Fed is plotting its exit strategy from QE. Better than expected retail sales data this morning, though, has helped to drag S&P futures back to near the flat line.
Chatter surfaced on Friday afternoon about a potential article detailing the Fed's plan to wind down QE, and sure enough after the close the WSJ article was released to allow markets the full weekend to digest its implications. It appears the Fed, amid a growing storm of criticism last week from prominent hedge fund investors at both the Ira Sohn and SALT conferences, is prepping the markets for an end to QE.
The gap up from May 3rd job's data helped fuel another week of gains. With the DOW at 15,000+ and the S&P hitting north of 1630 it makes some sense for the Fed to tweak its approach.
The real questions are, how will the market handle the news and how can we navigate it? World markets are slightly red, but now US futures are down only marginally. Over the weekend, many were expecting a volatile reaction to the WSJ article, but so far the market seems undaunted. For the bulls to lose some momentum, we will need to see a close below 1618-1623 (if this happens). We could see a move to retest the 1597 area (the 21day is also here). Pivot resistance stands at 1633-1635.
Rotation is still the key theme. Tech in particular remains very mixed but has many opportunities.
Google (GOOG) had a great additional move since the $803 buyable pivot after earnings. At this point it's very extended from all moving averages and the 8-day stands at $857 (which it's been riding this since earnings).
Netflix (NFLX) finally woke up a bit after the two week consolidation since earnings. Last week $210.50ish was buyable, now the next pivot buy would be a trade through $219-221 on heavy volume. Make sure it stays above that level if it does initially push through it.
Apple (AAPL) is in a very interesting spot. It had a tradable move after earnings from about $410 to about $465ish. It pulled back last week. For this stock to stay in the game and continue its post-earnings strength, holding above $445-447 is important. It would also make things easier if we can hold above $450.48 today. The 50-day MA is all the way at $433, that would be the last line of defense for the bulls. If we see that this week, some disbelief about the stock recovery could grow louder.
Amazon (AMZN) got hit after earnings, but only went below its 200day for a day or so before popping back above. See if it can stay above $260 now.
eBay (EBAY) also recovered very nicely after getting hit on earnings. The chart is repairing but needs time.
Oracle (ORCL) is trying to get into its earnings gap. That could be a spot for a quick trade through $34.03.
Intel (INTC) is hard to chase here, but also trapped some short. Nice move from $22 pivot.
Microsoft (MSFT) finally had a pullback. The 8-day caught up, it might need the 21-day that stands at $32ish.
Facebook (FB) still frustrates many. I got stopped out on Friday, and short-term guys are probably trying to stay away. Longer term guys should make sure the $25 area holds.
LinkedIn (LNKD) is still in the penalty box since earnings after a monster run. It feels to me like it needs to see the $165 area.
Many biotechs stocks have been on the move, which we will cover in the Morning Call video.
Celgene (CELG) is best-in-breed in the biotech group as it's trading near highs after seeing a nice push of 3.3% on Friday. The all-time highs is $128.52. Holding above Friday's breakout level of $124.10 could help the stock to break above this key level soon.
Biogen (BIIB) saw a controlled pullback into its 21-day where it held and bounced back up on Friday. It also held the prior breakout level of $209 which is a healthy signal. Look for continuation above $212.93 today as the stock could see a move back to year's highs at $226.18.
Amgen (AMGN) has been building a nice base at $104 where it held multiple times over the last few weeks. It saw a nice move up on Friday as it finished with almost 2% of gains which help it to regain the support of the 8- and 21-day moving averages. The stock closed on highs signaling potential upside follow-through, so keep an eye on this name.
Gilead (GILD) has seen a controlled pullback off its recent high and is trying to hold support of its short-term moving averages. Above $53.25 this stock could be back on the move
Alexion (ALXN) has been on the radar as we listed it on Off The Charts as a potential breakout above $100. The stock saw a nice move on Friday as it went as high as $104.14.
Short squeezes have been one of the themes of Q2. Here are some names in that realm that we continue to watch.
SodaStream (SODA) triggered our buy price of $56.37 that was listed on the Price Point Sheet on Friday. The stock was on our radar as it saw a nice push on Thursday after reporting better-than-expectation earnings. This stock has 45.2% short interest. We could see another round of short-squeeze as long as it holds above prior breakout level.
BlackBerry (BBRY) was a frequent mention on the VTF as it traded above $15.15 on Thursday. The stock continues to trade within the upper level wedge pattern that resolves to the upside above $16. Friday's action could lead to upside follow-through this week. It could be one of the latest heavily shorted stocks to squeeze.
Cliffs Natural Resources (CLF) saw a nice move up on Wednesday and flagged nicely on Thursday and Friday pointing to higher prices above Friday's high. We mentioned this stock on Wednesday's morning before that breakout, and the trade is still in motion so keep an eye on this materials play as it has a lot of room to the upside. Short percentage of the float is 24.8%.
Walter Energy (WLT) is another materials stock that saw a nice move off of low on Wednesday. The stock is currently flagging on top of that wide range bar. WLT has 15.3% short interest. Above $19.81 we could see another round of short squeeze.
Casino names have been active.
MGM Resorts (MGM) is a bit extended but looks like it could see higher prices this year.
Las Vegas Sands (LVS) provided a nice entry last week and looks good.
Metals continue to be erratic but weaker.
Gold (GLD) is opening lower but has intermediate support at $137.26.
The Inverse 20+ Year Bond ETF (TBT) had a very nice move last week. It ignited on jobs Friday, and showed commitment all week. A bit of a rest is due. See if it can hold $62.50ish.
At this point markets have been stair-stepping higher and each level has been holding on small intraday pullback. Let's see if that trend continues or if we have to make some adjustments.
*DISCLOSURES: Scott J. Redler is long BAC JPM AAPL CLF ARO NUAN. Long SDS- Short SPY