Despite plenty of good excuses for some big moves, the market did little today. Fed Chair Janet Yellen's comments before Congress produced nothing new and the market shrugged off her mildly hawkish tone. The vote in Greece dragged out, which caused a little nervousness later in the day, but there wasn't any big reaction to today's news flow.
The main driving force was just some profit taking and consolidation after a big move over the last four days. It was a bit dreary and slow, but the selling was routine and did nothing to change the improving technical picture. We still have the risk of news about Greece or China to shake things up, but this market is looking ahead to earnings reports.
Intel (INTC) earnings are hitting and very solid. EPS is 10% ahead of estimates and the stock is trading up over $2. As I mentioned, expectations were low and that set things up for a big move. Intel earnings have often marked key turning points in the market, and this is a good sign for the bulls.
Netflix (NFLX) is also seeing a positive reaction to its report, but expectations were higher and it didn't catch folks leaning the wrong way like INTC. It is trading up nicely and that will help momentum names in general.
This Intel report is good news and should help the bulls regain their momentum. We still have some headline risk overnight, but a good report from a key semiconductor stock is the sort of fundamental news that is going to give the bulls some confidence. Be ready for some buying tomorrow.
Have a good evening. I'll see you tomorrow.
July 15, 2015 | 1:25 PM EDT
Market Shrugs Off Yellen
- · She didn't say anything to spook the market, but didn't say anything bullish either.
While Fed chief Janet Yellen didn't say anything to spook the market today, she didn't say anything particularly bullish either. As a result we are seeing fades as the market consolidates four days of gains. In the past, this is the point where the V-shaped action would have many shaking their heads, but this actually is normal behavior. Overbought readings and overhead resistance are actually coming into a play.
At this point, pullbacks are not only unsurprising but technically healthy. We can afford to give some back, but it would be a positive if the S&P 500 holds the 50-day simple moving average support, which is right around 2100.
We have more Yellen tomorrow, but she really hasn't added anything new to her recent comments. She is still talking about a hike this year, but the market seems to be dismissing it as a feeble attempt to make it sound as if the economy really is better than it looks. This market isn't moving much on the Fed and is looking toward other matters, such as the vote in Greece and earnings tonight.
There is chatter about how Netflix (NFLX) has not done well on its second-quarter report over the past five years and no one is expecting anything very positive from Intel (INTC). Expectations are low, which is the good news, but they may be justified, which is the bad news.
I'm working to protect recent gains but I'm not concerned about the pullbacks. The market needs to digest the movement of the past week and these fades may be opportunities.
July 15, 2015 | 10:25 AM EDT
An Excuse for a Little Profit-Taking
- The market needs some consolidation after a four-day run.
Overall market action is lackluster to start the day but there isn't much reaction to generally hawkish remarks from Fed chief Janet Yellen's prepared comments.
Breadth is running about 2-to-1 negative on the NYSE, but the Nasdaq is doing better as biotechnology stocks and select technology names are doing well. Biotechnology names are aided by the Celgene (CELG) deal with Receptos (RCPT), which is causing traders to beat the bushes looking for the next set of movers.
Chips and banks are up slightly but all other key sectors are in the red. It is mild selling, and the market needs some consolidation after a four-day run. Yellen provides an excuse for a little profit-taking, but V-shaped moves create a supply of dip buyers that want to deploy capital and keep a strong bid under the market.
There's good action in Ambarella (AMBA), Facebook (FB) and LinkedIn (LNKD). Biotechnology names on my radar include Bluebird Bio (BLUE), Synergy Pharmaceuticals (SGYP), Second Sight Medical Products (EYES), Lion Biotechnologies (LBIO), Ziopharm Oncology (ZIOP) and Oncothyreon (ONTY).
It is good trading for stock pickers as the overall market is frozen on all the macro news that is developing.
July 15, 2015 | 7:33 AM EDT
There's a Big Crowd of Underinvested Bulls
- Putting money to work is the main theme right now.
"If people knew how hard I worked to get my mastery, it wouldn't seem so wonderful after all."
It is very quiet out there in the early going, but there is no shortage of news events to provide some catalysts for movement. We have the Greeks voting on their bailout deal, slightly better than expected GDP in China, Janet Yellen testifying before Congress, the first two major earnings reports of the second quarter, the Iran nuclear deal and a takeover in the biotechnology sector.
The news isn't having much impact so far, but the mood of the market remains upbeat. We've had the first four-day winning streak since January, as market players are greatly relieved to ignore Greece and to have China stabilized.
Breadth has been good, we are closing strong, the S&P500 has regained the 50-day simple moving average and we have leadership from key groups like biotechnology and key stocks like Amazon.com (AMZN) ¿ which is a holding of the Growth Seeker portfolio -- and Facebook (FB), which is being held in Action Alerts Plus, the charity portfolio co-managed by Jim Cramer. In many ways, the market is back to the sort of action that has been so pleasing to the bulls for so long.
One of the primary lessons of the market over the last few years is that it hasn't paid to anticipate negative action. Once we are on track, you have to stick with the action. The folks that try to fight the V-shaped move end up as fuel to keep it going.
While the price action is quite positive, we still need to stay vigilant. The indices still are not back at their May highs, and they face some technical overhead. Obviously, there is the potential for some market-moving headlines, but this market is trying hard to ignore negatives.
Yesterday we had some weak retail numbers that pushed back expectations for interest rate hikes. Janet Yellen will be discussing that today and will try to reconcile it with her recent comments about how it may be appropriate to raise interest rates this year. The market doesn't believe it, and indicators show that no hike is expected by those with money on the line until next year.
After the close, the Intel (INTC) and Netflix (NFLX) earnings reports will be of particular interest. NFLX has consistently moved big on its report and INTC can be a market mover. Expectations for NFLX are high, but they are quite low for INTC. Chip stocks have been a mixed bag, and INTC has a low bar to hurdle, which may be a positive.
Traders will be focusing on biotechnology again today. The group has regained its mantel as the leading group, and a takeover last night is helping the mood. This group is the best indicator of speculative health, and it looks pretty darn good right now.
In this environment, it is very easy to over think the macro headlines and to talk yourself out of some good trades. The key is to respect the price action and not let all the fortune-telling pundits push you to act as they predict disaster once again.
It isn't all that easy to put cash to work, but there is a big crowd of underinvested bulls that are trying hard. They are helping to keep the V-shaped action going.
We have a flat open on the way, but the dip buyers are likely to be active should we see early weakness. Putting money to work is the main theme of the action right now.