Morning Market Thoughts
Good morning. Yet another bullish morning on Wall Street…at least for a while. Over the last 10 days, the S&P has traded in a very narrow range — less than 1%. So that’s a whole lotta nuthin’ going on, and as I type this, the S&P is red, and the Dow has given up half of it’s meager gains. So this is just another day in a series of patience-testing days that will gradually take your money if you insist on trading actively. This just isn’t one of those times where money is laying around the floor to be picked up by savvy traders who know how to capitalize on the ups and downs of the market. In this current environment, there are just fewer ups and downs…and the ones that you find are quite narrow. Not much reward, irrespective of the risk you take.Facebook (FB) is on tap for tonight, and Amazon (AMZN) will be out tomorrow. Gotta think that Amazon will be amazin’. It’s interesting that AMZN is trading in a fairly tight range, so it’s set up for a pretty big move either way. I have no clue about Facebook.
Careful about aerospace and defense stocks. Raytheon (RTN) and Northrop Grumman (NOC) look a bit heavy as they test support. NOC posted earnings this morning that beat EPS estimates. They also guided higher for the rest of 2016. The result? A gap…and a crap! The stock is now down less than 1%, but it is 2.3% from its intraday high. So this is a stock that is likely to trade either sideways…or start drifting down simply because the relative aggression of buyers and sellers has shifted to the sellers, who are taking profits from a very nice uptrend. At the very least, you might want to place a stop down around $215…or even a bit higher.
Raytheon (RTN) is slated for tomorrow, and that stock is now falling below the 50-day moving average, likely in sympathy with NOC. It just looks a bit sluggish and unwanted.
Comments on NUGT: Yesterday I mentioned that I was out of NUGT in the morning, but then bought back in later in the morning. Because I know that there is often some follow-along trading happening, I thought I’d let you know that I see last Wednesday’s high as strong resistance for this ETF and have liquidated my position already. Now, I’m just watching for my next entry. Holding the stock is also fine. But I just see the resistance and don’t feel like I want to hold it through another test of the 50-day moving average. I’d rather wait for a pullback to run its course and offer a good entry; or, wait for a breakout above $140 and then buy the breakout.
Trade it any way you want. I just wanted to share my approach with you.
Have a good day.
–Dan
Market Update