Minyanville's T3 Morning Market Call: Earnings Could Wake Up Sleepy Market

By T3Live.com  JAN 15, 2013 8:57 AM

In the tech sector, Apple is under pressure and Dell may go private.


S&P (INDEXSP:.INX) futures are down four to six handles this morning as earnings season gets set to start in earnest. Fed Chairman Ben Bernanke didn’t really say anything unexpected yesterday after the close except that he thinks the debt ceiling should be raised with no strings attached. While he may be right -- the failure to raise the debt ceiling would be a catastrophe -- we need to stop kicking the can down the road with no conditions or plan to rein in our spending. The action has been slow and digestive since the fast start to 2013, but earnings could be the catalyst to stoke some volatility.

Anyway, S&P 500 ETF (NYSEARCA:SPY) micro support is $146.43 with the 8-day around $146.10. So far this year we’ve been above this moving average, making it easier for intermediate trend traders to maintain a portfolio approach. Markets can still hold up well after testing their 21-day MAs, which for the SPY is down at $144.63. The S&P is still pausing in front of the September highs pivot at 1474.

Today is the much-anticipated Facebook (NASDAQ:FB) event. The stock has come a long way in two months, rallying more than 70% in that time. I have been long FB at selective points of that rally when there was a calculated setup, and Friday you could see on our Virtual Trading Floor(R) that I exited my last piece of that position. After a "Red Dog Reversal" setup yesterday, I did try a cute short, but already covered ahead of the event. The news release will come at 1:00 p.m. ET. Sometimes when you see a big run up in a stock into a mysterious event, ala Apple (NASDAQ:AAPL), you could see the market try to "sell the news," but we will not make that assumption. We will certainly be following the price action closely in the VTF, though.

Bank earnings will get going tomorrow. Wells Fargo's (NYSE:WFC) lukewarm earnings caused the stock to close lower on Friday, but ultimately they were taken in stride. Tomorrow morning we have JPMorgan (NYSE:JPM) and Goldman Sachs (NYSE:GS), then Thursday we have Bank of America (NYSE:BAC).

At this point the banking group has had a major run since the summer, so I believe it’s prudent to have taken some profits, but it does feel like this group will see higher prices later this year. Bank of America went from 8ish to $12+, and now it’s trying to hang on to its 21-day MA. How the stock handles $11.33 will be interesting. A micro level beyond that is $11.05 and then $10.50-10.65 is major level to watch.

Tech is a mixed bag. Amazon (NASDAQ:AMZN) is at highs, breaking yesterday out of an upper level consolidation. The stock has provided great technical action for traders. Google (NASDAQ:GOOG) is sending mixed signals now as earnings get closer. It had a pretty nasty engulfing day yesterday and looks set to potentially test its 21-day MA around $720ish. It’s worth a look to nibble long if it holds.

Apple is still under pressure. Yesterday the stock opened sharply lower and couldn't show any life during the session, finishing down 3.6%. We have a new small pivot from yesterday at $498.51, then bigger support comes in around $486. The stock is still "for sale" and could remain that way until earnings. Micro resistance stands $507.50 then $515. Back on December 10, 2012 we did a special AAPL video talking about how the choppy and heavy action was a bad omen for the stock.

Salesforce.com (NYSE:CRM) is another stock, like AMZN, that is basing near upper levels. This cloud name wasn't blockbuster yesterday, but continues to work higher.

VMware (NYSE:VMW) has a tight pattern and seems like it could continue if it ignites above $97.50ish.

Hewlett-Packard (NYSE:HPQ) had a major run so far this year as it hit some bigger resistance. In my opinion, selling $17-17.50 is better than buying it for now.

Dell (NASDAQ:DELL) erupted yesterday after reports that the company could be taken private. The stock is up a bit more pre-market today. Technically the stock had built a nice mid-level base even before the news, which is what prompted Marc Sperling to buy calls on Dell well before news hit the wires. I certainly wouldn’t be short the stock but that doesn’t mean you can buy it up here.

IBM (NYSE:IBM) has still no real action, but as I said in my 2013 predictions I think you need caution there. A break and close below $185 could be dangerous. A break below $187 and you should certainly pay attention as it would mark a break down out of a steep multi-year uptrend.

Metals are up a bit this morning. Some think currency wars are brewing. There is a story out there that Germany might want a ton of its gold back; let's see how that develops.

The Gold ETF (NYSEARCA:GLD) has resistance around $164, and it needs to close above that with some authority for it to get back on track for upside momentum, in my opinion.

Positions in DANG, ZNGA, DELL, VMW, GE, BAC, INTC, TBT, F, LNKD. Short SPY, HPQ.