STTG Market Recap February 14, 2013

Stocks gapped down to begin Thursday’s session as European GDP data came in poor, but within the first hour buyers showed up as they have all of 2013.  In the end both the S&P 500 and NASDAQ eeked out gains of 0.07% and 0.06% respectively.

Economic output in the 17-country region fell by 0.6% in the fourth quarter, the EU’s statistics office said on Thursday, following a 0.1% drop in output in the third quarter.  The drop was the steepest since the first quarter of 2009 and more severe than the average forecast of a 0.4% drop in a Reuters poll of 61 economists.

Outside of the European GDP figures, the big news of the day was Warren Buffet’s Berkshire Hathaway bidding for H.J. Heinz (HNZ).

Berkshire Hathaway and 3G Capital Management will pay $72.50 a share, or $23.3 billion, for Heinz — a 19 percent premium to the stock’s all-time high. Including debt, the deal is valued at $28 billion. The deal is an unusual one for Buffett since he is partnering with 3G, a Brazilian private equity firm that owns a majority stake in Burger King. Typically, Buffett prefers to make his acquisitions outright. However, the billionaire investor told CNBC that he was approached with the idea for the deal in December, and thought it was “my kind of deal.”

As for the indexes, markets continue to absorb recent gains by correcting via time (sideways) rather than price. The sideways action has allowed the 10 day moving average to move up to support the S&P 500.  One can see that other than a few volatile sessions in early February this 10 day moving average has been excellent support throughout 2013.

The NASDAQ continues to stall at old highs of 3200 but if the S&P 500 pushes upward next week so should NASDAQ.

You can see how volatility has been sucked out of the market by the McClellan Oscillator.  Not only is it near zero, it has been for many days and there has been very little in terms of movement up or down.  Quite strange actually.

We continue to see strength in financials and energy, as well as semiconductors – all offensive sectors.  This is an improvement from what was seen eariler in the week when a lot of defensive sectors led.  Notice all three charts below have the same pattern of late – a bull flag, and then a breakout this week.

BeSpoke Premium has a very interesting piece on “Triple Threats” – those companies which beat both on the top line (revenue) and bottom line last quarter, AND increased guidance.  Over the long run these are generally the companies who perform the best.

Since the fourth quarter earnings season began at the start of the year, 46 companies have reported earnings triple plays.  These are stocks that beat earnings and revenue estimates and also guided higher on their report days. We consider triple plays to be the cream of the crop of earnings season, so they’re all worth researching for potential buy opportunities.

We went through the price charts of these 46 triple play stocks and identified the ones that we believe look the most attractive from a technical perspective right now.  The 12 names listed below are the stocks from the Q4 triple plays list that stood out as having the most bullish chart patterns. These stocks have all just had extremely positive earnings reports, and they have technicals on their side as well.

Join 17,000 Investors

Receive Daily Market Recaps directly in your email inbox!

Log, Store, and Analyze Your Trades

Whether you're a new or seasoned investor, the StockTradingToGo Trade Journal helps you trade better:
  • Step 1 - Add trades
  • Step 2 - Mark strategies and mistakes
  • Step 3 - Analyze your results
  • Step 4 - Improve your trading
Get Started Now