Buzz on the Street: Investors Thankful as S&P 500, Dow Jones Continue to Climb
A look back at the happenings on Wall Street this week, as seen by Minyanville's Buzz & Banter.
Here is a small sampling of the 120+ posts seen on the Buzz & Banter this week:
Monday, November 25, 2013
Lions Gate Sells Off, Get Ready for Round III
Lions Gate (NYSE:LGF) is down 8% in a sell-the-news reaction to the monster $161 million opening for The Hunger Games: Catching Fire.
Lions Gate is actually 17% off its October high as traders got out of this one early, at least relative to the first Hunger Games trade of 2012.
I am thinking about taking another long trip with Lions Gate, as there are still two more Hunger Games movies on the horizon, plus Divergent, another huge-selling dystopian book series. In fact, in early October, Amazon (NASDAQ:AMZN) said the third book in the Divergent series, Allegiant, was outselling the final Hunger Games book by a 5:1 margin.
The first Divergent film comes out in March 2014, and so it may make sense to hop on this one early. In terms of trade structure, I'm thinking about some risk reversal, selling out spreads to finance the purchase of calls. I'll follow up if or when I decide to take action.
Gastar Breaks Out
Despite the news over the weekend of an accord with Iran, Buzz favorite Gastar (NYSEMKT:GST) has broken above its recent high and out of a long basing pattern. The current measured move works to around $6.25, or more than 15% from current levels. Liking new long entries right here.
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Tuesday, November 26, 2013
Amazon: The Stock that Could Break this Rally
The stock to watch the past few years has been Amazon. If you had to pick a stock that could single-handedly break this rally, this is it. The monthly chart is definitely in the "you have got to be kidding" category. Drilling down to the hourly profile, a drop below 362.75 would put in jeopardy the November 14 mini-breakout and could usher in a steeper correction. This is the stock no one dares short, and for good reason. That could also makes it a tricky if not downright dangerous stock to own going into Black Monday, unless it significantly corrects before.
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After Hugh Hendry last week, another famous bear threw in the towel: The venerable McClellan turns bullish.
Wednesday, November 27, 2013
Thank You, Mr. Market?
Investors have had to raid the supply closet and break out the old party hats and confetti a couple of times recently, as both the S&P 500 (INDEXSP:.INX)(1803.02) and the Dow Jones Industrial Average (INDEXDJX:.DJI)(16075.75) have surpassed "big, round" milestone numbers in the past few days (1,800 and 16,000, respectively). Whether or not these numbers actually mean anything in the grand scheme of things is debatable, but the media loves to focus on these "newsworthy" events and, as a result, it can draw the attention of even the most apathetic market participants, many of whom may still have capital sitting on the sidelines. No one likes to be ignored and left behind, so could these eye-catching headlines be the impetus behind the recommitment of whatever cash the retail public still holds? These unsophisticated investors have historically been the ones left holding the bag at market tops, so would a final retail influx into US equities be the death knell for this seemingly unrelenting rally? Only time will tell for sure, but whatever happens will ultimately be reflected on the charts, and that is where I draw your attention to now for some possible guidance.
Without question, we are definitely in an uptrend and have been for months now without a major pullback. We should begin any form of market analysis with this premise in mind and remember that picking tops and bottoms is usually a fool's game. So until the uptrend is broken, it is likely advisable to remain invested and take advantage of any dips to initiate or add to positions. However, one should not throw caution to the wind or get caught up in the bullish fervor. It is always sensible to evaluate the potential risks to your portfolio, and the monthly chart of the Dow may be providing a hint of one such risk. If you take a look at the chart at right, there is a confluence of long-term trendlines right where the Dow currently resides, which will likely provide resistance to any further up move. That is not to say that the market strength cannot push over this point, but that selling pressure can be expected to make life a little more difficult for the Dow than it has been recently. The market may require a pause or even a retracement before attempting a move over this level. This is something to be mindful of as you look for a possible "Santa Claus rally" to close 2013.
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Of course, the Dow only represents 30 stocks and is not the best representation of the market as a whole. The S&P 500 and the Russell 2000 (INDEXRUSSELL:RUT)(1134.36) have already surpassed their commensurate resistance lines and continue to make new highs. All in all, you should remain cautious, but I think it is safe to say a quick "thank you" to Mr. Market on Thursday for providing us with a favorable year in the equity markets.
With assistance from Raymond James analyst Andrew Adams.
Running Inverse Head & Shoulders: Apple
A little Running Inverse Head & Shoulders in Apple (NASDAQ:AAPL) (from late October through Monday) projects to around 545 which is 50% of the entire range of the decline from its 705 peak.
Below, see a daily Apple chart from October.
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