Markets inch higher to start the week and it seems all the media is focused on Apple earnings. But, if you look at the list due out tomorrow it is a big day for tech overall. Microsoft, Yahoo and Apple all report and that should give plenty of insight into where we stand. With that in mind… time to put your stops at levels you are willing to accept the risk should things not go according to plan. If things go well then look at levels to lock in some gains on the moves higher on short term trades. In other words, focus on money management and what your goal is relative to the positions and your overall portfolio. We all want to let the profits run as long as possible, but we also have to protect the risk of the uncertainty still in play.
NASDAQ moved to another new high on the day, but forfeited some of the gains into the close of the day. I like what is taking place in the sector currently and the earnings data as stated above will have an influence on how this unfolds going forward. Internet is the clear leader for the sector, but the semiconductors continue to lag without much change on the upside near term. Watching how the software companies fair during earnings especially on the security software stocks. HACK is the ETF for the sector and it has show some weakness similar to the semi’s… The earnings focus is in full swing for the sector and the broader index… if all goes well upside will materialize further, if things show some negative details it will put downside pressure on the sector. Simple enough, but you still have to execute according to your plans.
Financials did well to kick off the earnings parade, but have struggled of late. Regional banks (KRE) and large banks (KBE) have both tested the moves from earlier in the month. Hitting resistance at the June highs and watching to see how it unfolds from here. I still like the longer term view of the sector and opportunities that higher interest rates will present to the bottom line moving forward,
Energy broke the support at the $72.50 mark and continues to accelerate on the downside move. The downtrend remains in play and the short trade continues to work well in the sector. What is the challenge? Crude oil prices are creeping lower again and broke the next level of support… The supply outlook remains a challenge and not much is changing on that outlook despite the analyst and pundits stating that oil would move back to the mid 70s by year-end. I am not a believer in that camp and we continue to manage our short positions in the sector.
The focus needs to be on the charts and the technical data. The fundamentals will pepper in some momentum depending on the results of the economic data as well as the earnings moving forward. I am on the side of the technical data as the uncertainty from investors and traders has been too erratic. If the trends establish themselves going forward it will likely be the precursor to the fundamentals following… until then, lack of confidence continues to show in the charts very clearly short term. The trend is your friend… follow the leaders.