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Can Market Strength Continue in February?

Scott Redler

Scott Redler, the Chief Strategic Officer for T3Live.com, and Brittany Umar take an in-depth look at several sectors, including transportation, banks, high-tech, and oil, discuss whether money is coming out of bonds (TLT and TBT), and walk through the charts of Facebook (FB), Apple (AAPL), LinkedIn (LNKD), Baidu (BIDU), and Google (GOOG).

Futures are under a bit of pressure this morning despite a fairly quiet weekend. On Friday, stocks were able to continue higher despite a mediocre jobs report. Most headlines were focused on the Super Bowl, and there seemed to be quite a bit more volatility in the game last night then we've seen in the stock market lately. All in all I thought it was a great game. I was rooting for San Francisco, and they lost but showed some pride. Congratulations to Baltimore.

S&P futures are off five handles as we had those "jinxing" Dow 14,000 headlines this weekend. For this current stair-step approach to continue, the S&P 500 ETF (SPY) should hold $150.40, in my opinion (with the 8-day moving average at $150ish). A bit of consolidation above this area would be nice before we potentially continue higher through our new pivot resistance that stands at $151.42. We talk about all S&P levels, and individual stock levels, in depth each night in our Off the Charts newsletter, here is a sample.

As earnings start to die down, we could start hearing more about the sequester. Also, come could start to look forard to the ECB policy meeting on Thursday, February 7. Some think they could try to talk down the Euro a bit as it's had lengthy move.

We continue to see nice rotation in the market, but it's hard for me to put on core trades at these levels. We have taken a long-focused approach since around Thanksgiving based on the technical action, and that continues to appear to be the right mindset, in my opinion. The market has shown impressive resilience so far this year with most gap downs being bought and filled.

Banks woke back up after a nice basing period since earnings.

Goldman Sachs (GS) didn't wait around and has led the way higher since breaking above $121.

Morgan Stanley (MS) had some nice action here as it gapped up on 1/18 and then showed continuation through $23 on Friday.

Citigroup (NYSE:C) has been basing and tried to get back in gear Friday. I believe above $42.50 and it could see more upside.

Bank of America (BAC) helped to lead the way in December and just rested for a few weeks. It woke up Friday and looks good to continue. Above $11.75 could keep this going.

Tech continues to be a mixed bag.

Google (GOOG) has been acting best since earnings. It had a nice gap to trade against from 1/23 and has been working higher since. Finally it got the Momentum move above $760 Frida. Historic highs were $774ish.

Amazon (AMZN) has not been acting well since earnings. I'd avoid it or give it some time. Important support is $262-258, and if it gets under that area it might get pressured.

Apple (AAPL) needs to get going soon otherwise it could go lower again. Micro support stands at $448.50 then pivot support is at $435. It needs to get above and clear $462ish to relieve some pressure.

Netflix (NFLX) continues to give some two-way action since its explosive earnings move. A big upper flag forming. Resistance stands at $173-175 with support at $160-163.

Qualcomm (QCOM) has a nice earnings gap to trade against. See if it can do work above $65.50.

Facebook (FB) acted poorly on Friday, perhaps some knew that Barron's was putting out another negative story. I have been long. The last time Barron's printed a bearish FB article they gave the stock a price target of $15, so don't take what anyone says at face value. It would certainly be nice to see the stock go positive, or hold $27.75-28.25 to stay constructive in the coming sessions.

LinkedIn (LNKD) has earnings Thursday and still acts okay. I think it's only a matter of time before LNKD could see $135-145, not sure if it's this quarter or the next one.

The short bond thesis--(TBT) long and (TLT) short--is actually providing some follow-through for 2013. I think this can continue.

Money continues to rotate into Oil Service ETF (OIH) and Energy (XLE). OIH is approaching some pretty big monthly resistance in the $44.50-45.50 zone. Schlumberger (SLB) continues to work higher. The next pivot is around $80. Halliburton (HAL), Pioneer (PXD) and EOG Natural Resources (EOG) also look good.

Casinos still act well. Las Vegas Sands (LVS) is stretching higher, but there not much you can do here now, in my opinion. The most recent buyable picot was $54. Wynn (WYNN), at first glance, didn't have a great report, but markets bought it later. The next pivot is $127ish. MGM Resorts (MGM) is very sloppy but still building this upper flag. The stock needs to clear $13.15ish to get in motion.

*DISCLOSURES: Scott J. Redler is long BAC, DELL, FB, DBC, AAPL, TBT, WMT, GE, LNKD call spread. Short SPY