Home > Stock Market Analysis > Market Currents: May 16th, 2012

Market Currents: May 16th, 2012

Uncertainty in Europe has been weighing heavy on markets here in the U.S.  I think once things across the pond get sorted out, we’ll have a much better picture on where we’re heading.

Taking a glance at the S&P 500, it looks like we’re in a downward-sloping trading channel:

The upside to this is that we may be at a short-term bottom.  My thoughts are that we only go up from here.  I envisage a run-up to 1360 where we’ll be met with some resistance.

The AAPL daily chart looks similar in that we’ve been sloping downwards since the April 10th highs.

It’s difficult to say where we’re heading, and it may be safe to sit on the sidelines until a clearer picture forms on what direction it’ll take.  We’ve filled the gaps from March 13th and 14th at 552 and 568, respectively.  Since the gap-up on Jan 25th was a break-away gap, I’m inclined to say this will not fill, so there is no worry about that here.  My gut instinct is to say that we’re heading up from here, however I’m concern that this support at 552 won’t hold.  If 550 is breached, we’re heading to 520 easily.  Buy your Puts if you see prices below 550.  I would like to say 552 will hold and head up to the upward boundaries of the channel around 575/580.  I believe this may be contingent on Macro data and how the Eurozone looks.

My portfolio at a glance:

Holding tightly onto my trading thesis, selecting high growth biotechs, I’ve been able to catch some great run-ups from VRTX and MDVN that are helping along the laggers, such as ACHN, DNDN, and GALE.  I am particularly interested about ACHN.  There’s some great data coming out from ACH-1625.  I’m fairly bullish on Achillion despite their poor stock performance.

Some quick ideas that in no way, shape, or form represent something I’m immediately going after:

Short JCP.  They seem like a mess over there at JC Penney.  Possible short of the year?

Long GRPN (yeah, crazy, but with Facebook IPOing, it’s an interestingly low-priced play.  Even though I’m massively bearish on GRPN long-term)

Long USHS, HD, L — playing the housing market recovery with these is an interesting play.  Think about it, most likely people aren’t going to be buying or selling new houses just yet.  They are probably going to be remodeling or renovating to get ready to buy/sell.  Where do you think they’re going to get the hardware and know-how to do this.  That’s right, home improvement shops like Home Depot and Loews.  Ok, so why US Homesystems?  This is the company that provides the supplies for Home Depot.  Like I said, an interesting, indirect play on the housing market improvement.  Oh, quick plug here, this idea is Leo Leydon over at Financial Focus on Money Matters Boston AM 1120.  You can listen live on the weekdays from 8am-9am EST.

Okay, that’s it for now.  Happy trading!

Categories: Stock Market Analysis
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