1) (Un)Lucky 13 Most would say thirteen is an unlucky number. Maybe this time around it will prove to be lucky. The S&P 500 was sideways for the thirteenth (13) straight session closing, down .11%. Most of the weight was caused by weakness in energy as the Energy Select Sector (XLE) was down just over 3%. Weakness in oil was the major reason for energy names being down. Read the Oil Update below, by Jeff Cooper for additional thoughts. We continued to see the Nasdaq outperform as it was able to ride the strength of theNasdaq Biotech. Index (IBB), which closed up 1.29%, to a .47% gain. Apple (AAPL) and Netflix (NFLX) were also up big today, gaining 1.80% and 3.56% respectively. 20 Year Treasury Bonds (TLT) were also down sharply, losing 1.49% 2) Oil Update Today, our friend Jeff Cooper is back to weigh in on oil: Oil bounced off its 200 day m.a. on Friday and judging by the outsized moves on many names in the sector such as CLR (flagged in this morning’s report as vulnerable) and CXO which left large range outside up days (to mention a few), it looks like many players suspected oil was going to make a V Bottom at its 200 day. However oil is right back down today despite a retreat in the dollar and it looks like our 38/39 square-out level is magnetizing oil lower—assuming this is part of a constructive pullback if that level holds. Today’s downdraft in many energy names following Friday’s sharp turnup puts the possibility of a Hook, Line & Sinker bearish pattern short term on the table. So we could see some fast, climactic action in coming sessions in the group especially if oil snaps 40 which was a key level on the way down early this year. 3) Who Says to Sell In May? The one and only Scott Redler lends his insight into how to navigate this market: Those who said, “sell in May and go away” didn’t do so well. Now a lot of people are saying to sell in August. Before we just go off following the crowd, let’s go step by step. The 8 day moving average is $216.54- if you are micro trader, you get out with a close below that. If you are more of a swing trader, use $215.30.Otherwise, stay the course. We have pivot resistance at $217.54. A trade and close above that, look for continuation towards $220, or a big Red Dog Reversal (RDR) with that pivot to give a clue. We’ll also want to see oil hold last week’s low.
Continue Reading -->By T3 Live Staff Come join us in a FREE webinar! Click here for the upcoming schedule. 1) The Sideways Shuffle Today we saw what many traders have been looking for; an up day in Oil. This is the first time in the last 7 sessions that Oil was able to close bullish. The S&P 500 was sideways, once again, but able to close near the top of the range, up 0.18%. It is closing in on a month since the last time the S&P has produced a 1% move or better. The Nasdaq outperformed, again, on heels of strong earnings from GOOGL and AMZN. Gold found its way to the top of the advancers’ column today, with GLD rising 1.05%. 2) Range Precedes Price Today, Jeff Cooper provided some insight into the action on DexCom (DXCM): Our old friend DXCM continues its runaway move. Note the Spike Volume Bottom in Feb that defined the washout when everyone who wanted out got out. The large range breakout on 7/19 on increasing volume saw DXCM reclaim 50 % of this years range. From that point, DXCM has been in runaway mode. Typically runaway moves don’t offer much in the way of daily pullbacks so using an Opening Range Breakout is a good strategy. Also buying on the first intraday pullback offers defined risk entry. Today for example DXCM gapped open, pulled back into the gap window and exploded higher. 3) In Weakness, Opportunity is Found Our friend, Kurt Capra provided an interesting take on yesterday’s bearish candle on Facebook (FB): So, Facebook (FB) reported earnings after the close on Wednesday leading to a gap up Thursday morning to new all-time highs. After dancing around the first 2 hours of the day, FB began to pullback into the gap. It proceeded all the way down, finally finding support at $124.00, leaving the daily chart with a large red candle. To most, that would be seen as bearish. But, if you look beyond face value, it is an opportunity to get long for a ride back to, and through all time highs. Why would this be case? Take a look at the hourly chart from today and you’ll see a pullback and double bottom. So, the red bar from Thursday was nothing more than a controlled pullback to support and the whole number ($124); nothing to be scared of. In fact, quite the opposite. To the trained eye, this is an opportunity to get long, from a great spot, and enjoy a ride back to, and through, all time highs. If fact, if you go back and look at the daily chart of FB, notice how many times red bars were negated within the next day or two? This is a powerful concept that combines multiple timeframes with pattern recognition; something all traders should intimately understand. P.S.- If a double bottom fails, it can be an even bigger opportunity…even in failure, there is opportunity!!
Continue Reading -->By Michael Comeau 1) Lucky 13 for Facebook Yesterday after the close, social media giant Facebook (FB) delivered a massive earnings beat, sending shares as high as $133.91 in extended trading, or up 8.6%. The company is seeing significant growth in mobile, higher revenue from Instagram, and improving user engagement metrics, Facebook’s huge numbers weren’t exactly a surprise, since the company had beaten Wall Street’s earnings estimates for 12 straight quarters, making yesterday lucky number 13. This set the stage for a sell-the-news reaction, and Facebook finished well off the highs at $125.00 up 1.4% on the day. However, Facebook shares are still doing incredibly well in 2016 with a 19.4% year-to-date gain. 2) Jeff Cooper on Facebook’s Exhaustion Signal This afternoon, my buddy Jeff Cooper issued an interesting take on Facebook’s weakness: FB is poised to leave a large-range Gilligan sell signal if it closes at/near session lows. This is an exhaustion signal marked by a gap up to a new 60 day high with a close at/near session lows. AAPL is a different pattern as its earning’s gap was not a gap to new 60 day highs or 52 week highs or all time highs as is the case with FB. My takeaway is that institutions are scale-up sellers on pops. Tomorrow we get the reaction to two other FANG stocks (AMZN and GOOGL). If they react similarly to FB or don’t blow out expectations, there may be nothing left on the table to prevent a slide. 3) Another Day, Another Grind Given that crude oil is a major drive of equity market sentiment, I’ve been a bit surprised at how well equities have held up in the face of oil’s near-20% decline off the highs. And again today, we saw oil decline sharply… and stocks basically rolled their eyes. The S&P 500 went nowhere for the second day in a row, finishing at 2170.06, up 0.2%. In fact, the S&P hasn’t made a 1% move since July 8. Facebook and Apple’s (AAPL) small gains today helped the Nasdaq outperform. Biotechnology led the decliners’ column today, with the S&P Biotech ETF (XBI) falling -0.5%. Energy stocks were down on oil’s decline, with oil service names showing notable dips. P.S. My partner in crime Kurt Capra is hosting a FREE trading webinar after the close on Tuesday, August 2, 2016. Click here to sign up
Continue Reading -->Global markets are flashing slightly red this morning despite yet another whopper of an earnings report from Facebook (FB). Facebook is around $130 and making new record highs, and I’m asking myself why I ever sold this stock. It’s especially impressive in the face of Twitter’s (TWTR) struggle to just meet its own guidance. NDX futures are slightly in the red, as are SPX futures. Overnight, Euro-area economic confidence beat expectations and German and Spanish unemployment declined. We’ve talked extensively about how post-Brexit data has been beating expectations, and the trend continues. Of course, this plays right into a conversation about the Fed because the Brexit has been a source of concern. Yesterday, the Fed said it is less worried about near-term economic risks, which wasn’t a total surprise given the aforementioned data trends. Some folks are attributing today’s little slump to the Fed’s little hawkish twist, but I’m not buying that for 2 reasons: 1) The dollar actually FELL and gold rose after the release of yesterday’s Fed statement, showing that traders still think the Fed’s going to move slowly. The perceived odds of a Fed rate hike have risen, but perhaps not enough just yet. The dollar and gold are also following through on yesterday’s moves. 2) We’ve come a long, long way. The SPX is up 166 handles from the post Brexit lows and the FTSE 100 is up even more on a percentage basis. (see chart) This little sideways grind feels more like run-of-the-mill digestion, which I think could continue. I see August as being similar to the April-May snoozefest that bankrupted hordes of aggressive put options buyers. SPX barely budged yesterday, but there were some positives below the surface. Tech (inspired by Apple’s (AAPL) big earnings report, biotech, and small caps al did quite well, even with another big drop in crude oil. Crude oil is an important driver of risk sentiment and fundamentals (it heavily impacts earnings and high-yield energy bonds), so I’m a bit puzzled at how the market yawned at a near-20% drop in WTI crude. The big question I’m asking now is whether the good news we’re getting (solid economic data, huge earnings from AAPL and FB) is coming just in time for a short-term top. In my mind, price leads news (or as Mr. Jeff Cooper says, the news breaks with the cycles), so I’m wondering if this nice little streak of happy news is justifying all-time highs after the fact. We’ve got Amazon (AMZN) and Google (GOOGL) hitting after the close today. Should both of them beat, it will be interesting to see if that inspires real buying. For now, we still feel stretched and sentiment is positive, but you can’t argue with price — the bulls are holding strong. Good luck friends.
Continue Reading -->Want to start trading like a pro? Then click here. Trust me. By Michael Comeau 1) Apple Wins, Bears Cry As I wrote yesterday, expectations appeared to be very low heading into Apple’s (AAPL) Tuessday night earnings report. The numbers confirmed that suspicion as Apple reported better-than-expected revenues, earnings, and iPhone unit sales. The company also delivered very strong revenue guidance, which indicates that iPhone sales are holding up much better than the bears have expected. Apple shares ripped 6.6% to $103.03 today, helping to push the Nasdaq Composite and Nasdaq 100 indices to within striking distance of all-time highs. And let’s give Warren Buffett some credit — he disclosed his stake in Apple in mid-May when Apple hit its 2016 low. 2) The Bull Returns… Sort of Equity markets were a little odd today. Apple set off a rally in the Nasdaq and the widely-watched biotechnology was very strong, but the S&P 500 barely budged. The index fell -0.1% to 2066.58 — not exactly a barnburner! Oil prices and energy stocks slumped on higher-than-expected oil inventories, and we also saw weakness in utilities, real estate, consumer staples, and transports. Overall, the action felt like run-of-the-mill digestion, though with a clearly bullish tinge. If biotech makes another run like this tomorrow, we could see the S&P hitting new highs and the Nasdaq finally making its own new record. 3) Fed Schmed As expected, the Fed left rates unchanged today and issued a somewhat hawkish statement. The Fed said that employment data points to an increase in labor utilization, and that near-term risks to the economic outlook have diminished. Initially, gold fell and the dollar spiked, which are consistent with a more hawkish Fed. However, almost immediately, those moves reversed themselves and gold ended up 1.6% higher at $1,349/oz at the equity market close. And the dollar ended up at daily lows. Presumably, traders still believe the Fed will move very slowly as Fed Funds futures indicate that the next rate hike won’t happen until well into 2017.
Continue Reading -->I’ve been a long-time bear on Twitter (TWTR) and the company’s lousy quarter just reinforced the fact that it has 2 major problems: 1) User Experience As I’ve said before, unless you have a lot of followers, Twitter isn’t much fun. You don’t get much engagement relative to platforms like Facebook (FB) and Instagram. Meanwhile, go out and find any teenager and ask them what platforms they’re focused on. They’ll say Snapchat and Instagram, which offer more engagement, are easier to use, and are just plain more fun than Twitter. Not everyone can come up with clever one-liners, but everyone can take a selfie or shoot a quick video. This has to change. Twitter has to become FUN to use. 2) Guidance I’m baffled by Twitter’s inability to set its guidance bar low enough to generate real beats. For Q2 (reported yesterday), Twitter guided for $600 million in revenues. At the time (4/26), that was 12% below street estimates. And Twitter only beat it by $2 million in revenue! In Q1, Twitter actually failed to hit its own guidance, even though its guidance was 5% below street expectations when issued. Any smart company offers guidance low enough to beat. So if Twitter can barely beat its guidance, it says 1 of 2 things: either they continually overestimate their own revenue momentum, or they need to take investor relations 101. Given that their CFO is a former high-profile Wall Street analyst, I think it’s the former. Now if Twitter can’t beat its guidance for Q3 — which implies just 7% revenue growth — we’re looking at a single-digit stock unless it gets taken over. Perspective We have to remember that at one point, Facebook (FB) — the undisputed king of social and perhaps the greatest digital ad platform the world has ever seen — was at one point down and out. So a turnaround can’t be completely counted out, assuming Twitter can drastically improve its user experience. (I don’t have faith myself) That’s the first step to getting the numbers to turn, though throughout history, I can’t remember a single successful turnaround of a social media platform. Friendster… nope. MySpace… nope. AOL… nope. Google+… nope. For now, this chart below tells you everything you need to know about Twitter: It plots the 2017 consensus revenue forecast (red line) against Twitter’s stock price since the IPO. This is a good illustration of the trend of growth expectations for the company. In early 2015, analysts expected over $5 billion in 2017 revenues. Now they’re forecasting under $3 billion. That red line needs to start going up. Soon.
Continue Reading -->I was worried about Apple’s (AAPL) quarter the way everyone else was. But with very sour sentiment, I made a plan to buy if it could get and stay above $100-$101. I did that live on the VTF after-hours. Let’s take a look at the chart: Getting in was step 1. Now we’ll see if it can hold that area moving forward, and we’ll see what kind of levels the intraday action gives us. Step #2 is to reclaim the 200-day moving average around $103.75, and then hold above that for a few sessions. Step #3 would be to break the downtrend that has plagued the stock for well over a year. If that happens, Apple can turn into a tailwind for the next few months. I’ll continue updating you with key levels so we can effectively navigate the action together. If you’d like to trade with me live, take a FREE trial to the VTF.
Continue Reading -->Editor’s Note: This is a special FREE edition of Scott Redler’s Morning Note and his extended Morning Call video, which are released at 8:30 a.m. ET each day as part of Redler All-Access. Please call my team now at 1-888-998-3548 if you’d like to get Redler All-Access for FREE. ************* By Scott Redler We have mixed markets around the world this morning. Europe has positive action with the DAX +0.9%, CAC +1.4%, and the FTSE +0.3%, even with DB profits plunging 100% year-over-year. Asia was mixed as the Nikkei rallied 1.7% and the yen dropped on stimulus talks. Shanghai bucked the trend and is down 1.9% as they might curb some wealth management products. The Hang Seng rallied +0.4%. Our markets have been a bit choppy and erratic in this upper area. Strength has been sold and weakness bought as we’ve tried to figure out if SPX can hold above the 2155-2159 upper zone. If it continues to hold, we’ll see if it can break and close above 2175 after the 2:00 p.m. Fed announcement today. Some think they could be a bit more hawkish. Oil has been a drag as it slipped from $51 to below $43 with no real bounce. We’ll see if today’s 10:30 a.m. inventory number can turn it around to help broaden the rally a bit. USO has yesterday’s low at $10.02 to watch for a possible RDR long. UWTI has yesterday’s low at $20.27. Tech has acted much better since last week, when we said it can play catch-up to see all-time highs. QQQ is opening at 2016 highs. See if they can stay above $114.20 to keep momentum. Small caps had a choppy day but ended at 2016 highs with the IWM above $120.60. Now see if it extends and holds above yesterday’s high of $120.97. Banks have been flagging since earnings. Maybe a more hawkish tone gets them to clear this recent consolidation. I’ll write down what needs to hold, then pivots to clear to get back on the move. XLF has support at $23.55 and clearing $23.70 with volume could bring back buyers. JPM has to hold $63.50 and clear $64.30 to resolve the flag higher. C has to hold $43.80 and clear $44.40 to resolve the flag higher. BAC started to go yesterday and cleared $14.40. Holding this can get it back towards $15. MS started to clear its flag yesterday above $29.15 and it has room towards $30-32. GS has to hold $159.50 and clear $161.50 to try for the 200 day at $164.50. High-beta tech is on the move in separate patterns: NFLX held its post-earnings low Monday and closed well, giving some a clue to be long into yesterday’s gap up on the insider buy. Now see if it holds $90.90 as your pivot support. AMZN has earnings Thursday. I would avoid it until then. Recent support is $729-733. GOOGL has numbers Thursday. It’s been holding $750. It might give a trade above $760.50 before it. TSLA has lots of headlines flowing. Elon Musk talks up its potential, but also about a money raise. It needs to hold $225 to potentially give another trade above $231.39. MBLY got hit as news came it ended its relationship with TSLA. But it could strengthen with BMW. It will need some time. It can head into a gap fill if it clears $46.89. BABA has acted decent since clearing $80.05, but found resistance again at $85. Earnings aren’t until next week. See if it can hold $82.60 until then. NTES woke up Monday and had some follow-through above $201.50 to hit $206 yesterday. There is no setup now. PCLN is not doing much, but it is flagging after a big move. Support is $1305. Mega caps: AAPL had an impressive quarter after sentiment turned very sour. Now maybe with iPhone 7/7+ on the way, this stock could be more of a tailwind. It cleared $100.50 last night, giving us a good entry. If it can hold this, it could be more of a focus with decent resistance at $103.50-$105. First step is holding the gap up. Then, it needs to break the downtrend. MSFT still acts well but it’s a little choppy and extended. There is no setup but it’s fine as long as it holds $55.50. IBM acts fine but it’s also choppy. It needs to hold $161 to stay constructive. INTC had a nice move back towards the highs after holding the 21 day at $34. There is not much to do now. Social names: FB reports today after the close as it opens at another all-time high. There is not much to do now. It is priced for perfection. If you are an investor, congratulations. Traders should probably wait until after the report. $122 is the recent pivot high. TWTR still can’t put it together. It’s down 10%. There is support at $16.20ish. My options will be at $0. I will let dust settle and see how it shapes up today. Other notables: ACIA: after a big move with multiple pivots, it could use a rest. Jim Cramer pumped it last night. I may look for a cute short vs. $65.59. TWLO is choppy in this tight upper range. It seems like it needs earnings before the next move’s inside range. It has support at $39.50 and resistance at $41.70. LVS had a gap & go after earnings. I wouldn’t chase it now. See if it digests above the earnings gap at $49.27. WYNN has had a nice move since clearing the $97 pivot. It still has earnings to contend with. $105 offers some resistance. FCX had a big reversal after earnings. With a bit of time, perhaps it takes out $12.90 to get back towards $14. Metals are flattish. We have Fed statements today. GLD’s recent low is $125.11 after a corrective move from $131+. It will need to clear and close above $126.40 to bring in buyers. TLT: I’m not sure if the recent down move priced in a more hawkish
Continue Reading -->Global markets are in a happy mood courtesy of Apple’s (AAPL) better-than-expected earnings report, and Japan’s signaling of more stimulus. Apple is up ~$6.50 in the early going after beating analysts’ earnings, revenue, and iPhone unit estimates, and offering strong forward guidance. Meanwhile, just as traders thought Bank of Japan stimulus was priced in (based on yesterday’s big rally in the yen), PM Shinzo Abe showed commitment to a $265 billion stimulus package. That’s pushing the yen back down, which is great for risk appetites. SPX futures are slightly green, while NDX futures are up 0.7%. If Apple generates some follow-through among other large-cap techs, we could see a new Nasdaq Composite all-time high above 5231.94. And the NDX may finally exceed its March 2000 high of 4816.35. Facebook (FB) reports after the close, and if it repeats another blowout, maybe we see those records fall by the weekend. In related news, Twitter (TWTR) dropped another guidance stink bomb last night and is getting smashed up. Meanwhile, Fiat Chrysler raised its forecast, and Comcast (CMCSA) and GlaskoSmithKline beat. Crude oil is down after the API showed a very small decline in crude oil inventories after the close yesterday. EIA data hits at 10:30 a.m. ET. Economists expect a 2 million barrel decline. We also have durable goods, pending home sales, and of course, the FOMC rate decision. Fed Funds futures show that traders are pricing in a mere 10% chance of a rate hike today. The forward outlook will be key. I would pay close attention to see if the Fed eases up on its concerns over the Brexit, given that global economic data has been generally strong as of late. Lately, I’ve been emphasizing that perception of the Fed, which impacts all financial markets, is incredibly volatile. Ths is especially true this year. 2 months ago, traders were pricing in a 74% chance of a December rate hike. That number dropped to 10% chance after the Brexit. Now those odds are back up to nearly 50%. And we act like Tesla (TSLA) is volatile… Now one thing I found really interesting yesterday was the action below the surface in biotech. IBB was red because of Gilead’s (GILD) weak earnings report and big decline. Yet XBI, which is much more diversified (GILD is 8% of IBB), was actually well in the green. So below the surface, biotech was strong (as was the Russell 2000) on an overall snoozer of the day. So pay close attention to biotech — if it turns out to be a coiled spring, the bulls might party like it’s 1999. And 1999 was a good year!
Continue Reading -->I could post my numbers here and say that Twitter‘s gonna beat on EPS, have inline revenues, and the guide conservative, but frankly folks it doesn’t matter. For Twitter and this quarter, I think it’s all about the reaction to what they say. And what they are saying is new messaging and the messaging they should have had all along, which is about total platform engagement and the growth of that. Not the MAU metric, especially as Twitter doesn’t give themselves that soft-shoe MAU measurement. Twitter has never measured MAU’s the same drab way most every other social media company does. They hold their MAU’s to a higher standard than does FB, LNKD, and pretty much everyone else. But Adam Bain has been quite vocal about Twitter’s total audience and if that is where the commentary goes, Twitter is at least worth twice what it is today just given industry comps. Now I’m not going to say that Twitter’s quarter is totally meaningless on either something very good or very bad. A huge beat or a huge miss will obviously move the stock. But I’m not sure Twitter posts a quarter that is a big “financial surprise.” It’s all about assessing the opportunity and the future growth. The most encouraging “change” of late is the large ramp in video content and live streaming deals. This is definitely a notable positive change. A few more deals as well as “applications” that Twitter can keep bolting on and they will increase the “non-logged” audience as well as MAU’s. Simply put, there’s nothing more useful than Twitter from a personal and business tool in the social media space. Over time we will find out just how valuable that utility is to the company and others that are still activity building money making 3rd party apps using Twitter’s data. Oh, I will say that everyone that keeps playing Twitter for the M&A takeout will likely be disappointed, assuming they don’t hold it long enough. The single worst thing Twitter can do is sell itself for a premium over its currently depressed stock value. In fact, the more I look at the economic landscape I’m starting to think that LNKD made a huge mistake selling to MSFT. Why? Because if this US and Global economy does what I think it’s going to do, the next phase will be a material change in jobs growth, especially of better paying jobs. I also think salaries and wages could start increasing again. It’s very overdue for such a change as they haven’t risen in any material ways since 2006. That’s a decade folks. Thus, in a strengthening economy that grows Jobs, LNKD probably just sold itself for $5-10B less than what it would have risen to again on its own, And possibly $10-20B less than maybe they could have sold the company for in the future. Now just think that Twitter’s total addressable market is for sure 5X and possibly as much as 15X what LNKD’s TAM is, and you can see the potential for massive catch-up. However, that isn’t going to occur in weeks or on a single earnings report, especially one where the company has just finally figured out its correct messaging. Bottom line, I’m not sure the numbers for Twitter will be much of a surprise and I do very much think they will continue to guide conservatively. That is also a new and very positive long-term change which finally just occurred last quarter. However, if Twitter can keep tapping into to it’s “non-logged” usage which is roughly 500mm a day and grow that to the point where Twitter’s combined audience grows from the current 800mm total to 1.0-1.2Bish… we have a powder keg to the upside. And that is what I think the long-term path of Twitter is. The last thought I will leave you all with is IBM’s Watson. Is there a more important data stream to Watson than Twitter’s? I doubt it. And that’s just one example. I find it interesting that no one even talks about the Twitter Data license revenue anymore. But it hasn’t gone away and keep growing at a very strong rate. Once this stream’s base is big enough, it will become another key value driver for the shares. In the meantime, I’ll still be selling rips and buying dips but will retain a large slug in my core holdings for what I still believe should be a multi-bagger move. P.S. — I’d add one more thing. I think we are very close to a peak FB, Instagram, Snapchat type moment. IE., where the use of fun but sorta useless and definitely time-wasting social media platforms starts to see materially decelerating growth. That usage growth might itself even turn negative. If that occurs and Twitter’s use stays steady or even starts increasing again, that could be a whopper of an “inflection moment”. Moreover, I’ve not even baked that moment/turn into my long-term case, but it’s something I’ve been thinking about lately. As to me it’s very similar to thesis to where I called “peak Android” and noted that I thought iOS would see a massive increase and uptake of usage back in 2013. And I definitely think it’s worth noting that I’m having the above thought more frequently of late. ********* This was a special bonus edition of Sean Udall’s TechStrat Report. Click here to learn how you can get Sean’s best stock picks straight to your inbox.
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