Invest Where the Money is Migrating

Some selling on Monday, some buying on Tuesday… what do we get today? This still remains one of the most hated rallies and as a result short interested is elevated in most sectors. The jump in natural gas came on some short covering on Monday and Tuesday. The short interest in the bank stocks is near the 2008 levels. Time will tell who is right, but in the meantime we have to manage money based on our discipline and remain focused on our goals and managing the risk as we go forward. The following are some random thoughts on sectors and stocks on our watch list.

Semiconductors remain a drag on the sector. Texas Instrument is the latest to announce lower demand for chips. The issues in the PC market are one thing, but you have slower growth globally hitting demand as well. Pricing pressure ramps up as everyone tries to sell inventory. The sector has pulled back to support on the SOX index to the 200 day moving average. Yesterday Intel stop providing guidance and dumped the stock near support at $23.20. Scanning the sector shows a clear lack of leadership with a few exceptions. That said, the consolidation patterns and set ups on some stocks are tempting if we get any good news at all in the sector near term. For TC2000 users I posted a watch list results for our Tuesday night scan of the sector. If you don’t use TC2000 simply send and email to and we will email you the list.

Facebook stock is near a breakout point after testing lows near $17.75. The bounce came on the back of Zuckerberg offering some insight relative to profitability of mobile devices versus desktops. This is on our watch list of stocks, but we still believe it is a trade more than an investment near term. Once all the skeletons are out of the closet the longer term picture will gain clarity.

Apple is at the forefront of the media today with the release of the iPhone 5. Some say this will make or break the short term for the stock. I am not convinced of that based on what we know now. It may be over time that it is a turning point for the stock if the release is a flop technically. AAPL dropped $20 to $660 and support the last two days. Technically if we give up the $655 mark it is a short term negative with support at $613. Look for the opportunity in the reaction by investors if the selling accelerates.

Healthcare premiums for insurance could be ratcheting up quickly in 2013. The shift of workers paying for more of their premiums coupled with the increas of 5-9% per year in premiums it is hitting the average worker. Self-employed costs are rising even faster as well as individuals. This is another negative to the consumer as well as the sector fighting the rising costs. IHF, iShares Healthcare Providers recovered from the selling in May and have eclipsed the March highs. However, we are seeing more volatility in the sector and a decline in response to the studies. The broad sector is in play based on the move higher and the warning of these studies and the election could weigh on the stocks going forward. Determine your risk relative to holding the sector and manage your stops accordingly.

Natural Gas has jumped more than 10% the last two days? The short interest was sent scrambling to cover and the question is more sustainability as the commodity has been very volatile of late. The 200 day moving average is just overhead on UNG. The gap open missed our entry opportunity, but watch the inventory data today and a test of support could be an opportunity. FCG, First Trust Natural Gas ETF was up 2.5% on Tuesday as well moving back above the 200 day moving average.

There are plenty of data points to watch on Wednesday with Apple, Germany’s high court decision on the ECB, economic data and sentiment. Set your stops according to the risk you are willing to accept and keep looking forward.