The Trader Daily

 | Jul 17, 2014 | 7:30 AM EDT  | Comments
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Stock quotes in this article:

intc

,

hpq

,

csco

,

msft

,

IWM

,

spy

,

QQQ

,

pbr

,

tmo

,

aapl

Wednesday's story stock of the day had to be Intel (INTC). On the back of a strong earnings report, the stock, after closing Tuesday's session near $31.75, opened Wednesday's day session at $33.31. Even more impressive is the fact that stock closed Wednesday's session at $34.64. When was the last time we saw that kind of performance from INTC?

Intel bulls weren't the only ones celebrating the company's most recent earnings report. Shares of Hewlett Packard (HPQ), Cisco (CSCO) and Microsoft (MSFT) all surged on the report. Microsoft, for example, traded through the $44 level. And that's a level the stock has not seen since April 2000. The bottom line is that holders of dividend-paying old tech stocks benefited handsomely on Wednesday. The question now is whether Microsoft can keep the party going when it reports its earnings after the markets close on July 22.

Moving on to the broader indices, we continue to see the iShares Russell 2000 ETF (IWM) lag far behind both the SPDR S&P 500 Trust (SPY) and Powershares QQQ Trust (QQQ). I realize this divergence is turning increasing numbers of participants cautious, if not outright bearish. But the bottom line is that neither the QQQ nor the SPY has actually broken down. If your primary focus is the QQQ or the SPY, I would advise extreme caution when adjusting your trading bias based on the performance of a different market.

To be clear, the underperformance of the IWM is a concern and something that should be monitored on a daily basis. However, in what regards the SPY, I see little reason for anyone other than the short-term trader to fret until the ETF is closing beneath $194.

 

SPDR S&P 500 Trust (SPY)
Source: eSignal

 

In his Delivering Alpha Takeaways post Wednesday afternoon, Jim Cramer outlined a few ideas presented at the conference that he felt were especially interesting. Of these ideas, the charts of Petroleo Brasileiro Petrobras (PBR) and Thermo Fisher Scientific (TMO) caught my eye.

The chart of PBR is pretty straight forward. Short-term traders would be expected to get involved through $16, while longer-term investors might opt to wait for a weekly (or even monthly) close above $18. For those following PBR, the specific area I am watching is the late-October to mid-November 2013 swing high. Above that area (roughly $18) and I think the stock takes off.

The chart of TMO isn't quite so cut and dry. It's easy to spot the multi-month consolidation between $113 and $120.50. What's not so obvious, however, is that aggressive buyers may actually remain on the sidelines until the stock breaks through $122 (the bottom of the red shaded region on the chart below). The bottom line is that, while I like TMO's chart and think it has a lot of promise, I'd likely hold off pulling the trigger until the stock closes above $122.

 

Thermo Fisher Scientific (TMO)
Source: eSignal

 

Additional Notes:

  1. Since splitting its stock in early June, Apple (AAPL) bulls have been chomping at the bit to get long(er) the stock for what they believed was the inevitable ascent to $100. After Wednesday's performance, however, AAPL now appears more likely to test $90 than $100. Picking tops is a loser game. That said, until AAPL trades back through Wednesday's intraday high of roughly $97, I'd rather be short (or flat) the stock than long.

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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