Strong Outlooks To Push S&P Above 1100 Resistance?
Upbeat outlooks from economic bellwethers 3M , UPS and Caterpillar catapulted the S&P higher Thursday as investors shed some of their fears about the strength of the recovery.
"UPS guiding higher is a very good sign since the amount of shipping volume is directly correlated to the strength of the economy," says Peter Jankovskis of Oak Brook Investments in a Reuters interview.
But for the fourth time this month the S&P 500 failed to break through 1,100, a level that is proving to be a tough hurdle and could be in the way of further gains
Will upbeat forecasts from Corporate America be the catalyst that finally pushes the S&P above 1100,?
Instant Insights with the Fast Money traders
There's a tug of war underway in the market, muses Tim Seymour, between bad economic data that's making headwinds versus strength in earnings that's generating tailwinds. It seems earnings are winning and that could set us up for a late summer rally.
I have to admit this tape leaves me scratching my head, admits Guy Adami. The market move is extraordinarily impressive. However, when I look at the results from Caterpillar I can’t help but think the stock should be trading even higher. Now I’m watching the Vix ; if it stays above 23.5, the 200-day moving average, I remain bearish.
It's important to note there was no volume on Thursday, reminds Steve Grasso on the Halftime Report. All the 'up' days have lacked volume and therefore conviction.
From a technical perspective, I’d want to see the S&P pop above 1100 before I could feel that the market is moving with any kind of conviction, he explains. Around 1065 I’d start nibbling but 1100 has been resistance. As we approach that level I’m a seller. Don’t forget the 200-day is at 1112; and that’s likely a point of extreme resistance.
I have to admit that Caterpillar knocked a leg out from under my bearish case, says Brian Kelly. But Caterpillar results tell me we have a bifurcated economy; Anybody who can export to Asia is doing phenomenal – such as Caterpillar. I’m a buyer of companies that make things Asia wants.
Thursday's rally is a cry-fest for the bears, adds Jon Najarian. I’m bullish. I point to Union Pacific, he says. They’re showing strong shipments of autos, energy products and more. As for Caterpillar I’d expect the stock to boom over the next few weeks after the comments about needing to ramp up to meet all the demand.
BUY STUFF THAT MAKES WORLD GO ROUND
It takes a heavy current to get strategic investor Dennis Gartman to reverse his position. But in the early morning hours yesterday, Dennis shed his bearishness and found a trade to get behind.
What’s he buying now?
I want to buy stuff that if I drop it on my foot it hurts and I want to buy the companies that move that stuff. I like coal, steel and the railroads. The world is moving stuff to China.
I’m think all the reversals in stocks and the fact that the S&P has held onto gains despite reasonably bad economic news is an important market 'tell'.
CHART OF THE DAY: COPPER
Copper has been on a tear lately, rallying sharply over the past 5 session until Thursday when it broke above its 200-day moving average.
What’s the trade?
The copper charts has shown a good solid base, says strategic Dennis Gartman. I’m impressed. I’m not impressed but the US economies but I’m impressed by what’s happening in Asia.
TOPPING THE TAPE: THE REST OF TECH
The Nasdaq finished Thursday as the biggest winner of the major indexes with almost all areas of technology higher including large caps, semis and internet names.
What’s the tech trade?
In the space, the stock I like most is IBM , says Guy Adami.
I like IBM’s story too, adds Pete Najarian. But the stock keeps running into resistance. I like a lot of the Apple feeder names such as Xilinx, Altera and Cirrus Logic. Also F5 Networks and Akamai are worth watching; these companies are all talking about growth.
I’m initiating a position in RIM , says Karen Finerman. At this valuation I think it’s attractive as a bet the BlackBerry won’t become an also-ran to the iPhone.
I’d watch Nokia , says Tim Seymour. They’re making progress in their attempts to compete with Apple. I think it goes to $10.20.
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Trader disclosure: On July 22, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Seymour owns (AAPL), (F), (MSFT) (NOK); Adami owns (AGU), (BTU), (NUE), (C), (GS), (INTC), (MSFT); Adami’s wife works at Merck; Finerman owns (AAPL); Finerman owns (C); Finerman owns (JPM); Finerman’s Firm owns (JPM); Finerman’s Firm owns (MCD); Finerman’s Firm owns (RIMM); Finerman’s Firm is short (IJR); Finerman’s Firm is short (MDY); Finerman’s Firm is short (SPY); Kelly owns (BP) puts; Kelly is short (GS); Pete Najarian owns (C) Calls; Pete Najarian owns (CNI); Pete Najarian owns (DD) Calls; Pete Najarian owns (MU) Call spread; Pete Najarian owns (RSH), short calls; Pete Najarian owns (SSCO); Pete Najarian owns (TCK); Pete Najarian owns (VLO)
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