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Stocks holding gains

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In what's been a rather tightly traded range this afternoon, the major market averages are holding onto gains with the Dow Industrials (INDU) 8,693 seesawing back and forth the unchanged level as has been the case with the S&P 500 Index (SPX.X) 919.77 +0.2%. Only the NASDAQ Composite (COMPX) 1,336 +1.7% has been able to hold above the unchanged level since late this morning.

Dow breadth is split with 15 stocks up and 15 down. Losers have General Electric (NYSE:GE) $30.37 -2.97% holding above the $30.00 level, while shares of Hewlett Packard (NYSE:HPQ) $13.84 -3.07% continue to trade weak after Tuesay's earnings report. Dow gainers have technology and software sector bellwether Microsoft (NASDAQ:MSFT) $50.94 rebounding nicely after yesterday's decline back below its 50-day moving average (currently at $50.19), while telecom service giant AT&T (NYSE:T) $12.40 +2.73% tries to reclaim recent relative highs set earlier in the week of $12.85.

Sector weakness continues to be found in the more "rooted to the economy" sectors like the Oil Index (OIX.X) -0.66%, Oil Service (OSX.X) -1.52%, Natural Gas (XNG.X) -1.22%, Forest/Paper ($FPP.X) -1.16%, Cyclical (CYC.X) -0.53%, Transports (TRAN) -2.13% and Home Construction (DJUSHB) -1.35. Today's weakness in these deeper rooted and economically sensitive sectors has be still believing that technology shorts are doing the buying and bolstering the technology groups today.

The CBOE Internet Index (INX.X) 70.48 +3.96% continues to be today's sector gainer with Yahoo! Inc. (NASDAQ:YHOO) $10.31 +12.81% benefiting from an upgrade from "sell" to "neutral" by Merrill Lynch. In sympathy, shares of AOL Time Warner (NYSE:AOL) $13.11 +6.58% are also higher. I'm looking at resistance for AOL to be near $15.00.

Tomorrow, I hope to talk about a couple of potentially bullish plays that may benefit from seasonality. One subscriber seems to be on the same wavelength here as I'm going to look at a bullish play in shares of Campbell Soup (NYSE:CPB) $23.08 -1.74% and ideally I'd like to see the stock pull back to the $22.00 level for an entry point. Traders may want to get a head start on this one and look at some historical charts on a weekly time frame for the periods between September and December. Cold weather appears to be the catalyst for the wet soup market. Last year, equity bulls got a nice pop in the stock on a seasonal play from the $26.50 to $30 level.

I'm also looking at some bullish plays in the Airline stocks as the months leading up to and after the Thanksgiving holiday season tend to have the group trading more bullish. A stock I will NOT be profiling as bullish is United Airlines (NYSE:UAL) $3.04 -7.31% due to the "cloud of uncertainty" regarding potential bankruptcy. However, that "negative" might become a positive for shares of Frontier Airlines (NASDAQ:FRNT) $7.91 +18.5%. Those subscribers that have visited Denver International Airport may know that Frontier and UAL have the majority of gaits at that airport. Thinking here might be that if UAL does go the bankruptcy route, then the city of Denver may pull gate exposure at DIA giving Frontier more of a dominant position. Just a scenario that may be worth monitoring over time.

Jeff Bailey
Senior Market Technician
Option Investor

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