STTG Market Recap January 7, 2014

Blain here:  Hi everyone, just wanted to give you a notice that we will be doing our quarterly STTG reader survey tomorrow so there will be no daily recap.  As always it is just a few questions, and we appreciate hearing your assessment on how we are doing in serving you.

Yesterday we noted that while there were a decent amount of three day selloffs in 2013, the four day selloff was rare indeed, so it would be interesting to see if the bulls showed up today.  Indeed they did, with futures up sharply and the market never looking back after gapping up at the open.  The S&P 500 gained 0.61% while tech stocks led the NASDAQ higher, to a gain of 0.96%.  Keep in mind tomorrow afternoon we get the release of the Fed minutes from the meeting where they cut quantitative easing.  The key economic report of the day was the trade deficit which fell to the smallest level in 4 years as energy exports have created a mini boom in the U.S.:

The Commerce Department said the current account gap, which measures the flow of goods, services and investments into and out of the country, narrowed to $94.8 billion.  That was the smallest since the third quarter of 2009 and was an improvement from a revised shortfall of $96.6 billion in the second quarter.

Technically there has been nothing wrong with this 3 day pullback; it was overdue with the parabolic run at the end of 2013, and breadth measures remain healthy while no major support lines have been broken.   We’ll look at the longer term charts today – as we have been mentioning the past few months, the NASDAQ really has been the “easy one” to follow on this time frame for obvious reasons.

nasdaq

spx

JPMorgan, which has an “overweight” rating on Google, raised its target price on the stock to $1,305 from $1,100.

goog

Healthcare was also in spotlight today as Deutsche Bank upgraded insurance company UnitedHealth Group (UNH) -which is a Dow component – to a “buy.” Tenet Healthcare (THC) shares also surged.

unh

thc

We’ve talked a lot about U.S. social media companies the past few years, but today we will highlight one in China: YY …which conveniently has the same symbol as name.  It is not a tiny company, as its market cap is over $3B but it highlights why you always want to be on the lookout for high volume breakouts.  Note the volume in the lower pane as it broke out Jan 2… well above the average as shown by the red line.  Then volume exploded even higher on the 3rd of January…and has continued to be high the past 2 sessions.  Now at this point it is overbought but a good example of a high volume breakout pattern.

yy

Another example are the solar companies, which have come back into favor by the momentum crowd in 2014.  See Canadian Solar (CSIQ) below – all the same hallmarks as the YY chart with a massive volume spike.

csiq

Guess which state had the most people move to it last year?    Probably not one anyone would guess; hint – it is in the northwest.

 

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