The Trader Daily

 | Jun 19, 2014 | 7:30 AM EDT  | Comments
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Stock quotes in this article:

msft

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intc

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csco

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spy

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glw

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bmrn

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jcp

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cop

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scty

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SMH

Unless you were long the Volatility Index (VIX) on Wednesday, you probably saw your portfolio increase in value. Because aside from the Market Vectors Semiconductor ETF (SMH), literally every equity sector on my watch list finished the session in the black.

Home builders, Reits and industrials saw relatively modest gains. While sizable gains were logged by various members of the utilities, gold and silver mining, consumer durables and transportation sectors.

As we prepare for Thursday's SPY auction, it's important to recognize that while all time highs can only be labeled as bullish, the comically low equity put/call ratios, sky-high greed readings on CNN's Fear and Greed Index and generally strong momentum in traditionally defensive sectors are a concern. The bottom line is that the SPY has been pushed back into an imbalanced and trending state. As such, it makes eminently more sense to enter Thursday's session with either a neutral or bullish bias. Anything but aggressively bearish would seem logical.

As far as the day timeframe trader is concerned, I see no reason to entertain a bearish bias unless the SPY collapses beneath $195.10/$195.25. An early session dip toward $195.70 would likely attract our more aggressive band of dip buyers. While those wanting a bit more for their money might remain on the sidelines until something closer to $195.10 is advertised.

 

5-Min Volume -- SPY Chart
Source: eSignal

 

Despite recent moves in tech stalwarts Microsoft (MSFT), Intel (INTC) and Cisco (CSCO), Corning (GLW) bulls continue to lack the motivation to push the stock to new swing highs. That said, the stock is still in a longer term uptrend. And a strong close above $21.60 (preferably on a day where the intraday range exceeds $0.40-$0.50) would likely still be sufficient to attract our breakout momentum buyer.

If such an upside break were to occur, I'd immediate consider a protective stop (on close) beneath $20.80-$21.

GLW -- Daily Chart
Source: eSignal

Biomarin Pharmaceutical (BMRN) was last discussed in the June 12 Trader Daily. Since that time, the stock has done little more than consolidate its early June gains via drifting back toward the 50-day simple moving average. BMRN hasn't done anything wrong technically. So assuming demand remains intact above $59.30, I will maintain my prior assertion that the stock has room to run toward $64-$66 (let's just call it $65.50). As the bulls recapture $65.50 we'll begin targeting $70.50.

To be clear, I have zero interest in remaining long BMRN beneath $59.30.

BMRN-- Daily Chart
Source: eSignal

Additional Notes:

  1. Despite J.C. Penney (JCP) plodding along at a glacial pace, I remain positive on the name. A close above $9.20 is still needed to attract more interest to the name, but from there I'd expect momentum to build a bit quicker. Those already long should consider protective stop triggers of either $8.28 (swing low from June 4) or $8 (the obvious support level from late April). 
  2. ConocoPhillips (COP) has been a huge beneficiary of the bull market in energy stocks. However, with the stock's 14-period Relative Strength Index (on a daily chart) now registering a blistering $88.16, longs of every timeframe need to consider a more aggressive profit stop. To be clear, a high RSI reading can remain high for an extended period of time. But given that I've only see a reading this extreme on COP once before (mid- to late-February 2005), my inclination is to reduce any bullish bet in the name. 
  3. Bond bulls have not put on a convincing show over the past few days. As such, I want to remind everyone that a close beneath $110.79 on the iShares 20+ Year Treasury Bond ETF (TLT) would look bearish enough to warrant a switch in overall bias. A break of that level would have me looking for a slide toward $106. 
  4. SolarCity (SCTY) was suggested as a speculative long idea near $51 in the June 12 Trader Daily, and while the stock has clearly benefited from a feverish explosion of bullish sentiment in the solar sector, I'd urge momentum chasers to exercise extreme caution at current levels. Having closed Wednesday's session a bit above $67, I'd expect supply to re-enter the market toward $72.50-$73. Given that a realistic stop on SCTY would currently be back near the $50 level, my own inclination (had I not missed the bloody trade) would be to cut the position by 50%-75% at current prices and let the rest ride.

Any trading or volume profile related questions can be posted in the comments section below, emailed to me at parkcityyeti@gmail.com or posted to my twitter feed @ByrneRWS

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