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Stockhaven’s Market Take 1/9/13

Indexes rallied today and the VIX started to get a little bit of a bounce up as well. I’m seeing a lot of mixed signals though in the current back drop and suspect we’ll continue to get more of this choppy see-saw like action until they resolve themselves. Among them:

  • Banks turn south — XLF hit a high of $17.10 before giving up its gains for the day and finishing near its lows of the session below $17
  • Rotten AAPL — AAPL never even tried to participate in the rally today and looks like it could have a very ugly day tomorrow
  • Liking Facebook — FB has been rip central over the last 2 months and closed above $30 for the first time since 7/13/12

 Stockhavens Market Take 1/9/13
 

The banks have been a clear market leader for a long time now but that trade appears to be slowing down. I noted this yesterday in my market take: “XLF continues to churn as it trades just below the $17-$17.20 resistance zone, but we’re starting to see some banks trade better than others. JPM, C, & WFC for instance, all managed to shake off early weakness and finish near their highs for the day, something BAC and GS were unable to accomplish. This discrepancy among the major banks, albeit a small one (BAC & GS were down less than 1%) is an early sign of waning momentum. Combine that price action with the fact XLF is at resistance in the aforementioned range, and the banks look to me like they are setting up for a pullback. XLF will need to make a distinguished move above $17 to change my immediate outlook.” –Stockhaven’s Market Take 1/8/13

Today that momentum continued to wane as BAC (which was the best performer in the Dow last year) had its biggest one day drop since November, shedding 4.5%. In addition, C & JPM both put in topping tails while GS actually traded higher. This is interesting because you’ll recall that it was C & JPM that managed to finish near their highs yesterday while GS traded lower. This is a continuation of the discrepancy that first started playing out today, and I’m taking it as a bearish sign in the immediate term. Don’t get me wrong, there’s still a strong uptrend at play in XLF, but given that it keeps struggling with this $17-$17.20 resistance zone, the path of least resistance right now seems lower.

In what is becoming a common theme, AAPL just can’t get off the mat at all. The stock traded lower again and is now down 2.8% for the year. I reiterate my view that $500 is definitely in play ahead of earnings (1/23 is earnings date) and at this point it is starting to look like a magnet. The main thing I’m looking for should AAPL gap down tomorrow (as I expect it to) is for the volume on the 3 minute chart to stay high. In previous gap downs near $500 it hasn’t broken it and you’ll notice that 3 minute volume has had a tendency to evaporate after the open. If we’re going to get panic selling ahead of earnings and a move below $500, then volume should stay consistently high during the 9:33-9:45 periods on the 3 minute chart. I maintain a bearish view of AAPL so long as the daily chart is trapped below $530, but even then it still has a ton of resistance in the way on up to $550.

If AAPL was the stock of 2012 then FB is looking like it might be the stock of 2013, or at least try to. FB is already up nearly 15% early on in the new year and those gains are coming on increasing daily volume so the chase is definitely on. If this move higher is to be trusted, then you won’t see dips below $30 lasting very long ($28.50-$29 is key support to me). I have continued to be impressed by how well the market has held up in the face of AAPL’s weakness, but it is easy to understand why when you see how well a stock like FB is doing. If you haven’t been watching FB, you’ve been missing out on a great trade that looks to have some serious near term momentum on its side.

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