Morning Market Thoughts
Good morning. Stocks are up this morning, and AAPL is…so far…holding $127, which is the opening low of the day. As noted last night, if the opening price holds, then those who wish to own AAPL can start a position without risking too much money on a deeper pullback. I choose to wait a few days for the stock to settle in to a post-earnings trading range…but at least we have a support level to key on.Just a couple of other things…
CLVS continues to run higher, up another 2.3% this morning. If you are looking at this as a trade rather than a longer term hold, you may wish to use the 20-day moving average as a reference for your stop. The stock is trading decisively above that indicator now, and any break below it would signal waning momentum.
Anthem (ANTM) reported solid earnings this morning and continues on a very solid uptrend that has a ways to go. The company beat revenue and earnings estimates, and reported a much higher membership in Medicaid, which tends to be a cash cow for insurance companies.
That’s all I got this morning. Remember that we’re still in a trading range with the S&P just about 113 below resistance at 2,300. Overall this uptrend that started in November looks pretty healthy. I think this sideways channel that’s been slowing the upward momentum is just a necessary rest stop for stocks. After a big move, traders need to take profits at some point. And the question is whether, during profit taking phases, there is enough DEMAND to soak up all the supply at the current levels. If there is not a lot of demand for stocks because “they’re too high”, then the “profit-taking” phase will turn out to be more of a correction. But if demand is sufficient, the S&P just trades sideways for a while as the average cost basis of new shareholders is slowly raised to a steady and reliable level. Then, after all the supply is absorbed…prices move higher again.
This process takes a while, and I think we’re getting to the mature phase of that process.
See you in the forum.
–Dan
Market Update