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The T3 Morning Market Call: World Markets Green Ahead of Fed Meeting

Posted
7/30/2013 9:07:00 AM
By: Minyanville
Referenced Stocks:AMZN;CAT;GE;HON;UTX

World markets are seeing green arrows overnight as Europe is up small for the second day in a row and Asia bounces back a bit. The Nikkei (INDEXNIKKEI:NI225) held key support levels and finished up 1.5%. S&P (INDEXSP:.INX) futures are up three to four handles as we continue to drift around in this upper level range. Use yesterday's low as intermediate support.

The two-day Fed meeting starts today with the statements due out tomorrow. The S&P is now going on day 13 of consolidation, digestion, or stalling out, however you choose to look at it. The channel is being built above 1670ish as the 8- and 21-day moving averages have played some catch-up. Micro support stands at 1681 with the key spot at 1670. Resistance stands at 1691 then 1698. The psychological 1700 print has been elusive for the S&P.

There have been some micro mixed messages from some sectors for the "very active" trader to make adjustments, but for macro participants there has not been much to sweat. CNBC World Markets Editor Patti Domm included some of my thoughts in her blog post last night.

We will go over some industrials this morning:

The Industrial ETF (NYSEARCA:XLI) had a sharp sell-off on Wednesday last week that sent it below the 8-day MA, but the damage was contained at the $44.67 area. Active traders could see this as the upper level support to trade against. Below that, the 21-day at $44.45 is a bigger support area.

Caterpillar ( CAT ) bounced off lows of $81.40 yesterday and saw decent gains of 1.17%. It announced a big share buyback that could help support the stock. CAT has room to bounce toward $84.50ish. Be cautious as this has been a laggard stock and most rallies have been sold.

Honeywell ( HON ) has been on a nice run since October 2011 as the macro uptrend has been in control. The most recent technical setup in this stock was $81.10 when it broke out of the upper level range. Besides that, there is no real setup as it's been having a methodical grind up.

General Electric ( GE ) had a nice move after beating its earnings report on July 19, putting in a new pivot high at $24.95. Since then it has been in a descending channel, showing healthy digestion. As long as it holds above the earnings gap, which starts at $24.10, it could see higher prices moving forward. Active traders could use yesterday's low of $24.46, which lines up with prior pivot high and 8-day moving average as the new point of reference to trade around as it could get some support at this level. I'd potentially look for a trade above $24.70ish.

United Technologies ( UTX ) had enjoyed a great run since 2009, then recently held accelerated uptrend support, with the most recent one starting in June. It looks a bit extended on the weekly chart, but the daily chart looks good as if it is climbing the 8-day up. Until this short-term moving average is violated, macro investors could stay in the course. There is a nice bull flag continuation setup here that would trigger above $105.60ish.

We will also take a look at some commodity and currency ETFs .

The Gold ETF (NYSEARCA:GLD) reclaimed its 50-day last week, and hugging around this key moving averages shows some commitment. It has some resistance at $129. A break and close below this could make GLD look more interesting. The ETF has closed the bearish gap from mid-June and now it needs to stay above $126.50ish to stay interesting.

The Silver ETF (NYSEARCA:SLV) has short-term uptrend support in place since June 27's lows that has been acting as a road map. It could see some support at $19ish where the uptrend comes into play. SLV has been lagging gold a bit.

The Gold Miners ETF (NYSEARCA:GDX) broke above its 50-day with a nice gap up on July 22; it's been holding above this key moving average, which is constructive. The recent micro range is $26.60-28.35. GDX needs to break above $28.35 on good volume to get some momentum. The miners did lead the metals off the lows.

The Dollar Trust ETF (NYSEARCA:UUP) has been trading in a downtrend since July 9, with a big gap down on July 11 that put some more pressure on the ETF. It broke below the 200-day on Thursday last week and is hanging by a thread at $22 level. A break below this could lead to a retest of prior low of $21.82.

The Vanguard Europe ETF (NYSEARCA:VGK) has seen a nice accelerated uptrend since June 24's lows of $46.85. It reclaimed the 50-day on July 18, and has been getting support along the 8-day since then. More people are starting to talk about a contrarian bullish thesis in Europe, including Barron's . Holding above $51.35 would be constructive for a retest of the current high of $53.32.

My list of go-to momentum stocks continues to supply some nice opportunities.

Amazon ( AMZN ) saw an impressive move on Friday that brought it all the way up to $313.62, then yesterday the stock saw some profit-taking and retraced back to $305.90, which is the first support level. Below that $300 is another key support level. See how it handles these levels.

Tesla (TSLA) saw a gap-and-go Friday and then a follow-through move up yesterday to new highs at $135.37. The stock looks good on all time-frames. Look for potential continuation above yesterday's high of $135.37 -- almost at the level I talked about a few weeks ago in Quick Take: Tesla Could Hit Speeds of $150 .

Apple (AAPL) gave us additional entries at $441 and $444.60 yesterday. It was nice to see AAPL having a clean move up. Holding above the last buy pivot of $444.60 keeps the door open to the 200-day around $469ish.

Google (GOOG), after showing some signs of exhaustion with the bearish gap on Thursday last week, has continued to show relative weakness as it's building an upper level range. Key short-term support is standing at $875.61, where it could see some buyers. It's been drifting lately around lately.

Facebook (FB) had an impressive gap-and-go after earnings. It provided upside follow-through yesterday and gave us an additional entry at $34.73 area. Next real resistance is $36.66-38 from May 2012's gap.

There has been a lot of movement in individual names this summer despite the increasingly quiet market. You don't have to be all-in in either direction, and in late July, should not be in, in my opinion.