The stock market keeps making new higher-highs on lighter volume.
Which is more important? The new highs or the lighter volume?
Well we don’t take the volume to the bank, it’s only how we manage risk and gauge institutional activity. The price action is what matters and you can’t fight it if you expect to make consistent money.
Are we over-extended short term? Yes definitely, but don’t leave money on the table IF you are still getting clean signals.
With AAPL earnings in focus this afternoon, make sure you have resting stops in on open positions if you’re in tech stocks.
July 21 Stock Market Today: Map of the S&P 500
(click the map for a full view)
SPY had some profit taking yesterday afternoon. Nothing to change the focus of the rally. Looking for a pause the next few days. Spy hourly chart is below left.
(click the chart for a full view)
Stocks to Trade | Tuesday July 21, 2015
- Spy price action is 3 doji candlesticks out of the last 4 days. New highs but indecision.
Interesting Chart Lessons:
In our game plan meeting yesterday, we discussed PGR and the impressive rally over the last $10 days. (yes I know it’s only $3.50, this is a lesson about trade expectation). When a stock has a parabolic move, the closer you get to days 5 and beyond, you need to ask yourself “what are the odds of follow-through?”
Notice I said odds. I didn’t say what is definitely going to happen. There is a big difference. The closer your decisions get to probably versus definitely, the easier it will be for you to make trading decisions because you have removed yourself from being “right.”
We discussed the odds of buying a break out here above the previous day’s high as lower probability to make money. You can see the extreme reversal after it conveniently broke the previous day’s high by a few cents (most likely triggering retail buy-stops.
(click the chart for a full view)
Earnings in play today > 1M avg shares: AAPL, MSFT, VZ, YHOO, HOG, RMBS, CMG, GPRO, UTX, AMTD, BHI, BK, LLTC, TRV
Bullish Ideas ATR/Volume/Price: GGOG, FB, CELG, MBLY, AMZN, MPC, VLO, WBA, TWC, TSLA, RCL>85, UA, LLY, AGN, ACN, PNC, HON>107
Bearish Ideas ATR/Volume/Price: wll, clr, rrc, car, fslr, apa, uri, eog, mon,
Weak Stock Weak Close: joy, rrc, dree, nbl, fslr, cnq, mur, apa, kors, pxd, eog, epd, pot
Strong Stock Weak Close: FIT, TSO, NFLX, MS
Weak Stock Strong Close: gmcr, grub, yelp
Strong Stock Strong Close: FB, EBAY, TSLA, UA, V, ATVI, ABBV,
20 day Breakdown: joy, rrc, nbl, apa, nrg, eog, epd, nfx, cbs
20 Day Breakout: EBAY, FB, GPRO, HON,
2x Normal Volume: ncr, gld, gpro, googl, utx, fb, pgr, nbl
Watch List Longs: VLO, MO, TWC, DIS, CVS, SBUX, COF, USB, JPM, EBAY, C, ADBE
Watch List Short: cop, cvx, bby, slb, xom, nue<42, dd, intc<29, qcom, hpq,
Inside days: ncr, baba, slb, mat, csx, cf, jnj, pg, mcd, googl, sti, emr, coh, wy, teva, crm, kss, hca, yjx, ups, acn, ctsh, pru, a, hot
AAPL Earnings in Focus Today (after the close)
What to watch for in Apple’s earnings
Apple Inc. is set to report third-quarter earnings after the market close on Tuesday.
The third quarter is typically the slowest for iPhone sales, but analysts are forecasting a quarterly record of $29.9 billion, versus $19.8 billion in the year-earlier period, according to FactSet. Analysts expect strong iPhone sales to be buoyed by bigger-than-expected demand in China.
Unit estimates range from 48 million and 50 million, which imply year-over-year improvements of between 36% and 42% from the 35.2 million phones Apple AAPL, +0.84% sold a year ago.
Here’s what to expect:
Earnings: Analysts expect Apple to report adjusted earnings per share of $1.89, up from $1.40 in the year-earlier period. Estimize, a fast-growing software platform that uses crowdsourcing to garner earnings estimates from hedge fund executives, brokerages and analysts, has Apple earning slightly less: $1.86 a share. Apple has surpassed Wall Street’s non-GAAP EPS estimate for 11 straight quarters. It has toppled Estimize’s consensus in each of the past three.
Revenue: Sell-side analysts expect Apple to report revenue of $49.2 billion, according to FactSet, up from $37.4 billion in the same period last year. Contributors on Estimize are forecasting revenue of $49.3 billion. In April, Apple forecast revenue of between $46 billion and $48 billion. Apple missed revenue expectations in 2014’s third quarter, but it has trumped the consensus every quarter since.
Stock reaction: Shares of Apple are virtually flat from the company’s last earnings report on April 27, but remain up close to 40% from 12 months ago. Analysts are overwhelmingly bullish on the company, with the vast majority of analysts currently rating Apple the equivalent to buy, according to FactSet.
Among a poll of more than 40 analysts, the average 12-month stock target on Apple is $147.62, which would mark a 14% increase from Apple’s closing price of $129.62 on Friday. Shares of Apple ticked up 1.5% to $131.57 in Monday morning trade.
Apple Earnings: What to Watch
—EARNINGS FORECAST: Earnings of $1.79 a share is the consensus of analysts surveyed by Thomson Reuters, compared with $1.28 a year earlier. The company hasn’t provided earnings guidance for the quarter but in April said it expects gross margin to range between 38.5% and 39.5%.
—REVENUE FORECAST: Revenue of $49.31 billion is forecast by analysts, compared with $37.43 billion reported a year earlier. In April, Apple forecast quarterly revenue between $46 billion and $48 billion.
WHAT TO WATCH:
—ALL ABOUT IPHONE: The iPhone accounted for nearly 70% of Apple’s revenue in the previous quarter and is the company’s most profitable hardware product. Its importance to the company cannot be overestimated. The success of iPhone 6 and iPhone 6 Plus has reignited growth at the company. But success breeds expectations and Apple now faces higher bar to clear for its upcoming iPhone models, expected out later this fall. Historically, iPhones sales tend to trail off in the June quarter compared to the previous quarters. Many consumers hold off on purchasing new phones, anticipating that a new model may become available soon. Analysts polled by Fortune Magazine forecast that Apple sold 49.4 million iPhones during the June quarter, 40% more than a year earlier.