Caution, S&P Near Possible Selloff Point
The Election Day high around 1005 might be a turnaround point for the market.
I've been pointing at it since we broke through S&P 950. I've barked about S&P resistance at the Election closing highs of 1005.75 as a top potential for ages. I didn't predict it happening yesterday, on Obama's birthday but yesterday's close was mentioned as critical. I even drew a picture of the highs, just to make sure it was clear for everyone.
We close 10 pts above, the bears gotta give (unless they've been lucky enough to hold their fire in which case 1020 is a nice short starting point, according to a decent number of Minyanville's finest). In terms of a natural top on the other hand, closing within .1 pts of the Election day highs on the S&P, exactly 8 months after making that high, sure made for a mighty nice cap to a blistering rally.
So as I've been sharing with you all, I've been playing it tight, booking some trades (sold some Research in Motion (RIMM) today when I saw it green) and growing increasingly cautious as we neared 1,000 then 1,005. Closing at 1,005.65 then selling off, at least for the day so far, should make me happy.
But the market, to quote Worm in Rounders (danger: naughty talk): In the Poker game of life, the market is often the Rake; it scrapes your happiness away from you and keeps perfectionist types ever suffering. My suffering? I sold a decent amount of stocks that have moved higher. Bank of America (BAC) (which I also pictured yesterday) has tacked on more than a buck from where I sold it. I booked a gain but would have been simply killing it had I been smart enough to go to Canada on Monday morning.
When a sell-off is gassed by what you still own and offset by what you don't; it's time to go blow up some Northern in Canada. That's your lesson of the week, if not a rule for Life:
One name I'm not sweating is Amazon (AMZN); which is now coming under legal assault in addition to pressure from Sony (SNE). Sir Howard "The Dark Knight" Stringer, has been leading a turn around effort with Sony for a decade. He doesn't speak Japanese, which isn't a meaningful problem at Sony since the silos (entertainment, hardware, et al) don't talk to one another in Japanese or British (it's own language and not to be confused with American English). As a threat to Amazon, Sony is somewhere between the Toys 'R' Us web site and Pets.com.
Yahoo! (YHOO) earned back its absurd punctuation by allowing me to pick-pocket select members of the selling stampede and pick up shares about fitty cents below current levels. The goal isn't loving your portfolio, it's profiting from it. (Though my hating BAC is between me and BAC. It knows what it did.)
Speaking of love, if there really is human-based global warming from carbon emissions make mine a double! The USO ETF did big volume at the lows of the day ($37.16) and has moved more than a buck higher since. Why? Because it loves me is be best guess, without getting all jargon-ish. It simply loves me personally for thinking the entire global warming caused by humans movement is sham science.
As Jeff Cooper once taught me (or taught me first), "it's not the news, it's the reaction." Electronic Arts (ERTS) simply cannot wait for this gaming console cycle to end. The company never saw Nintendo (NTDOY) coming. As a result, in a world in love with Wii simplicity, ERTS was making games that make me feel Methuselah level old. I was raised on games and Electronic Arts line-up baffles me. I couldn't beat your grandparents at NFL 22, or whatever iteration their pumping out these days. Did anyone on earth expect them to have a good quarter? No one who will admit it. Regardless, the stock is down 7.5% on earnings which simply proved that ERTS remains ERTS.
From where I'm sitting (as always, atop a mountain, legs crossed and passing judgment on all that is below me); you make money on video games by waiting for the next cycle. It should be here in a couple years. Until then, it's too late to buy Nintendo. Electronic Arts did what the winners of every cycle have before it by losing its crown. The new kings are Activision (ATVI) which, through mergers and a general Rockstar-led butt kicking of ERTS, now has almost three times ERTS' market cap. It makes me love ATVI a year ago but is old news now. Go teach your kid to bowl on Wii; it's a much better way to play than trading the stocks involved.
With that, I'm off to pack for Canada and watch the SPX as it, no doubt, makes another run at 1,005.75. If the party isn't over yet, bulls, it's getting awful late. Mind a breakout but I'd rather be underinvested than collecting new longs here. Which doesn't remotely forgive BAC, just so we're all on the same page. I'll be back and hopefully actually seeing you, early next week.
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