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Market Rests Ahead of Earnings Season Kickoff

John Darsie

The market finished with small losses Monday following the S&P's strongest week since December 2011. The S&P dropped 0.3% on the day, trading in a narrow range after a lower open. Volume on the S&P 500 ETF (SPY) was the lowest for a full session since the day before Thanksgiving as investors wait for the kickoff of earnings season, which unofficially starts tomorrow after the close with aluminum giant Alcoa (AA).

After a stellar start to 2013, don't get carried away with exuberance at these levels. As a trader, you always have to be asking yourself: where is risk the lowest?

Apple (AAPL) tried to reverse after an early morning dump, but lost momentum in the afternoon. The stock finished the day down 0.5%.

Amazon (AMZN) opened near new highs this morning after an upgrade, and continued higher during the session. AMZN finished the day up 3.6% at all-time highs. AMZN has been the strongest stocks in the high beta tech sector, and formed a nice cup and handle pattern into the new year. AMZN is a company that makes very little profit at this point, but invests heavily in technologies that will position it to be extremely successful over the coming decades. After this extension higher, I wouldn't necessarily look to initiate new positions. If you want to be involved in AMZN, wait for a pullback, in my opinion.

Facebook (FB) also continues its impressive comeback after seeing its stock price halved in the first four months following its controversial IPO. The initial move ignited on November 14th as FB shrugged off its biggest IPO lock-up expiration. In December the stock basically put in one long bull flag, and today FB broke to its highest levels in six months. Based on Scott Redler's predictions, look for FB to potentially get back to the $33 level this year.

The 3-D printing stocks 3-D Systems (DDD) and Stratasys (SSYS) continue to impress as excitement over the budding technology starts to seep through Main St. DDD and SSYS finished the day up 3.1% and 3.4%, respectively. Both stocks trade at very lofty multiples, but investors seem unfazed as they look toward the futures of manufacturing. Momentum traders like Mike Lee and Steve Levay have been following these stocks closely, and the sector will likely be heavily in-play for the foreseeable future.

*DISCLOSURES: Evan Lazarus is long SPY puts, short SPY.