Minyanville's T3 Morning Market Call: Central Bank Expectations Driving Bullish Action
US stock futures are up around six handles Monday morning as the
market looks to close out its sixth straight positive month. After
an impressive five-day bounce off the 50-day moving average, the
(INDEXSP:.INX) rested on Thursday and Friday, which is healthy. On
Friday, we saw the market shrug off a weak GDP reading, that also
included very weak expectations for GDP growth next quarter as the
sequester cuts come to roost. Combine that with a weak jobs report
last month and the economic picture right now is not pretty, but
the market doesn't seem to care. We have rate decisions from the
ECB and Federal Reserve this week, and those are the parties that
seem to be driving the bullish price action in equities.
The bounce back in gold (NYSEARCA:GLD) is perhaps a reflection of further expectations for world central planning. Japan's quantitative easing measures are well publicized, and the US Federal Reserve maintains its steady bond buying program. The ECB is expected to perhaps step up its level of aggression as inflation, despite fears, remains below targeted expectations. GLD is up another 1% this morning ahead of those ECB and Fed meetings this week.
After a five-day win streak, the S&P took a break on Friday with a small loss of 0.18% but held above the outlined key support level of 1575. It's important to see how the index holds on to its recent gains this week. The longer it holds above 1565-1575, the higher possibility we could see a retest of the current all-time high.
Wynn Resorts ( WYNN ) had a nice bounce off its 21-day moving average on April 18 when it put in a bottoming tail, flashing a buy signal. After that the stock saw a nice breakout on April 24 after earnings, which was followed by a bullish gap on April 25, which added some power to its recent rally. The longer it holds above the earnings gap and prior breakout level, the greater odds we could see higher prices. WYNN is the first casino to report, so its strong earnings numbers showed us some positive signs in this group.
Las Vegas Sands ( LVS ) broke out of the year-long wedge pattern it has been in since April 2012 on high volume on Thursday. The stock took a break on Friday as it put in in inside-day candle to digest to breakout move. LVS has reclaimed the support of all key moving averages, and the longer it stays above $56-56.15, the higher changes we could see some follow-through to the upside.
MGM Resorts ( MGM ) also ignited a breakout above the macro down trend since February 2012 on Thursday with above-average volume. The stock took a break on Friday, and it has some strong support at $13 level. As long as it holds above this support area, bullish momentum seems to remain intact.
Caesars ( CZR ), after finding some support at $12 and consolidating at this level for three sessions, saw a nice rally last week with a pro gap on Tuesday that added some fuel. The stock has pared most of the losses from the pullback since March 19 and got above all key moving averages. A pullback into its key 8-and 21-day moving averages, which line up with some support at 15ish, could present another buying opportunity.
Airlines stocks have some strong set-ups right now as a few look ready for potential breakouts. On Friday, airline shares rose slightly after Congress passed a bill that would let the Federal Aviation Administration keep all of its air traffic controllers working.
Delta Air Lines ( DAL ) held its uptrend that started in December on the recent pullback, then saw an igniting bar on April 23 with a solid earnings report. The stock is currently flagging above its key moving averages, foreshadowing a potential move higher. A move through $17 with some volume could trigger another round of buying in DAL.
Southwest Airlines (LUV) has a good-looking chart as it has been grinding higher above its 8- and 21-day moving average. Recently it saw a controlled pullback and bounced off its 21-day moving average. LUV is reaching some resistance from the prior pivot high at this point, and a break above $13.57 would marks the next breakout.
United Continental (UAL) has been in an uptrend since December 2012. It found strong support at the 50-day moving average on the last pullback, and currently is consolidating around its 8- and 21-day moving averages. A break above $32 could bring in some buyers. After that we have an additional buying opportunity at $32.95.
US Airways (LCC) has had a more methodical move to the upside with a longer-term uptrend that has been in place since November 2011. Every pullback has provided us some buying opportunities. The stock recently found support along its 50-day moving average and is consolidating around its 8- and 21-day moving averages. A break above $16.74 would mark the next breakout that could send the stock back to retest the current 52-week high at $17.43.
Google (GOOG) saw a nice rally on April 19 after beating its earnings estimate. It is now putting in a beautiful bull flag and on Friday put in a bottoming tail at its 21-day moving average. Keep this leading stock on your radar and use Friday's low of $796.58 as your new point of reference.
Amazon (AMZN) missed its earnings on Thursday after the close and saw some wild action. On Friday, the stock dropped more than 7% to trade at the $252 level. This is a strong support level, below this we have the 200-day moving average coming in at $251.40. If AMZN doesn't hold these support levels, we could see more damage done on the chart.
VMware (VMW) has been trading in a downtrend since March 15 when it got rejected at the 100-day moving average, and has lost the support off all key moving averages. It came down to retest the intermediate support of $70.30 multiple times. The stock is a short candidate for this week as a break and close below this level could mean more traction to the downside for VMW.