All About Tech

All About Tech

8:00am (EST)

The bulls and bears settle for a draw on Thursday as both sides stood pat ahead of a busy after-hours session. Tech earnings were heavy as the four horseman: Alphabet (GOOG), Amazon (AMZN), Microsoft (MSFT) and Intel (INTC) reported quarterly results. This morning's action ahead of the opening bell was equally important and highlighted the Oil sector.

The Dow added 6 points, or 0.03%, to settle at 20,981. The blue-chips traded in a 70-point range with the low reaching 20,935. Support at 20,800-20,700 easily held before the intraday rebound to 21,005. Resistance remains at 21,150-21,200 with the fresh blue-sky territory to 21,400-21,450 on a move above the latter.

The S&P 500 gained a point, or 0.1%, to close at 2,388. The index made a morning trip to 2,382 during the first half of action with rising support at 2,375-2,370 holding. A move below 2,365 would be a slightly bearish development. The second half push to 2,392 cleared lower resistance at 2,390-2,400 but a level that failed to hold.

The Nasdaq jumped 23 points, or 0.4%, to finish just under 6,049. Tech held positive territory throughout the session while reaching a fresh all-time peak of 6,050. My lower resistance targets at 6,075-6,100 are still in play and could trigger today. Support remains at 6,000-5,950.

The Russell 2000 slipped 2 points, or 0.2%, to end at 1,417. The small-caps made a morning run to 1,423 but failed 1,425 and new record highs. Continued closes above this level gets 1,440-1,445 in the mix. Support is at 1,400-1,395 on a pullback. Yesterday's low tapped 1,413.

The S&P 500 Volatility Index ($VIX, 10.36, down 0.49) bubbled to a midday high of 11.08 but held near-term resistance at 11.50 for the third-straight session. Upper support at 10.50-10 was cleared on the intraday low of 10.33 and was a bullish sign.

Alphabet and Amazon shares were higher in extended trading last night after both companies topped earnings estimates and revenue. Microsoft and Intel shares were lower in after-hours trading on Thursday. Intel beat by a penny but missed on revenue. Microsoft beat by 3-cents but missed on sales, as well.

From desk to press, futures look like this: Dow (-11); S&P 500 (-2); Nasdaq 100 (-3).

Market Slips Into Closing Bell

Market Slips Into Closing Bell

8:00am (EST)

The bulls nearly got a hat trick on Wednesday but were denied a 3-session win streak into the final hour of trading. The losses were minimal following a tight trading range of less than 100 points on the Dow with volatility staying subdued. These were good signs and showed normal consolidation following the two-day surge to start the week. However, I would like to see higher highs into Friday, or a settling above fresh support ahead of the weekend on any pullbacks.

The Dow dipped 21 points, or 0.1%, to end at 20,975. The blue-chips made a run to 21,070 while topping Tuesday's peak at 21,026. Resistance remains at 21,150-21,200 with the all-time high at 21,169. A move above the latter opens up fluff to 21,400-21,450. Support at 20,800-20,700 held on the late day fade to 20,972.

The S&P 500 slipped a point, or 0.1%, to settle at 2,387. The index tested a high of 2,398 shortly after Wednesday's open with upper resistance at 2,390-2,400 holding. Continued closes above the latter gets record highs and fresh resistance at 2,425-4,250 in play. Near-term support remains at 2,370-2,365.

The Nasdaq gave back a quarter-point, or 0.0%, to close at 6,025. Tech traded to its lowest point of 6,021 during the first half of action with rising support at 6,000-5,950 holding. A move below 5,900 would likely signal a short-term top. The second half push to 6,040 set a new all-time intraday peak with fresh resistance and fluff at 6,075-6,100 still in play.

The Russell 2000 advanced 8 points, or 0.6%, to finish at 1,419. The small-caps slipped two points on the open to 1,409 with newly minted support at 1,400-1,395 standing strong. Upper resistance and my near-term fluff targets of 1,415-1,425 were tested and cleared following the intraday climb to 1,425.70. Continued closes above the latter gets 1,440-1,445 on the board.

The S&P 500 Volatility Index ($VIX, 10.85, up 0.09) reached its peak at 10.89 ahead of Wall Street's lunch break with near-term resistance at 11.50 holding for the second-straight session. Additional hurdles are at 12.50-13.50. Upper support at 10.50-10 was breeched but held on the trip to 10.39 during the last 30 minutes of trading.

I have updated the parameters of our ORCL trade and I set an initial Stop Limit on SNAP. I'm still looking to add bullish call options on continued momentum although I do have plenty of bearish trades I'm still tracking.

From desk to press, futures look like this: Dow (+15); S&P 500 (+2); Nasdaq 100 (+4).

Cypress Semiconductor (CY) Earnings Preview

Cypress Semiconductor (CY) Earnings Preview/ Profit Alert (STM)

12:05pm (EST)

Cypress Semiconductor (CY) will announce earnings on Thursday, after the closing bell, and shares could be in store for a major move on the news. Wall Street will be looking for a profit of $0.11 a share on revenue north of $511 million.

The company has topped estimates in three of the past four quarters by a penny while matching estimates in the other. While I would like to see more than a penny beat, the high estimate is pegged at 12 cents with the low estimate at 11 cents. In other words, a match or a penny is nearly a given, according to the suit-and-ties, but a 2-cent beat might be a stretch.

This means another revenue beat might be needed to get more analysts to upgrade the stock and their price targets. In February shares jumped from $11.85 to close at $12.91 following a nearly $5 million revenue beat. Last October, Cypress also beat revenue estimates by roughly $5 million but shares closed lower by 15 cents to $10.11 the following session.

Last July 2016, sales came in $1 million over forecasts and when the company matched estimates for a profit of 12 cents. Shares closed at $11.68 going into the announcement but fell 4 cents the following session after peaking at $12.36. The stock tested a low of $10.57 by mid-August.

And finally, in the year ago period, or late April 2016, revenue topped estimates by $400,000. Shares fell a penny to close at $9.03 and rallied past $10 a month later.

Analysts have also been bullish in recent months over the stock.

Earlier this month, SunTrust upgraded shares to Buy from Hold with a $17 price target. In late March, two bullish Price Targets upgrades on the same day came from Needham and Pacific Crest. Needman upped its Price Target from $14 to $18 while Pacific Crest nearly copied with its upgrade from $14 to $17.

I have traded Cypress Semiconductor (CY) a number of times over the past few years and have been bullish on the stock since the single-digits. While I'm hopeful shares rally past $15 on the news, I also understand there is risk to $13.50 and the 50-day moving average, or worse, on an earnings or revenue miss.

Our current trade on CY was more on a technical setup but my fundamental research over the years has also been bullish. The company could see a huge jump in earnings in the coming quarter on the launch of the iPhone 8 and have recently raised prices on some of their chips. This might help with another revenue beat depending on how much increase they captured in the quarter.

I also went with CY June options to give the trade nearly two months to play out. This would lessen the blow of an earnings miss and realize the trade could take a substantial hit, if so. There has also been takeover chatter and a rebuffed offer of $15 a share in the past year. This should keep interest high in the stock and might renew chatter on a pullback.

Earnings trades are tricky and while I like them for their risk/ reward potential, I do try to limit my exposure to my portfolio with them. There are too many factors that have to go right and any curveball from management usually spells trouble. With CY, they have a proven on top and bottom line beats and the management team seems solid.

Turning our focus to the market, the bulls are trying to keep their very strong momentum going and have done well maintaining a steady pace with fresh record highs in play.

The Dow is gaining 38 points to 21,034 while the S&P 500 is adding 3 points to 2,391. The Nasdaq is slipping a half-point to 6,025 and the Russell 2000 is surging 10 points to 1,421.

I have updated our current trades, including a Profit Alert for STM, so let's go check the tape.

March Lows in Play

March Lows in Play

8:00am (EST)

The bulls were looking good for the first half of Wednesday's action as upper resistance was tested. However, the second half fade to session lows led to a mixed session with the broader market pulling back but Tech and the small-caps closing slightly higher. The bears are still on the verge of causing chaos as the blue-chips fell below their late March intraday low.

The Dow tumbled 118 points, or 0.6%, to finish at 20,404. The blue-chips made a run to 20,546 with resistance at 20,600-20,650 easily holding. The fade to a session low of 20,379 into the closing bell split support at 20,400-20,350. The close below the previous March low of 20,412 was a bearish development and gets 20,200-20,000 in play if 20,350 cracks.

The S&P 500 slipped 4 points, or 0.2%, to end at 2,338. The index traded to a high of 2,352 but failed lower resistance at 2,360-2,370 shortly after the open. I mentioned backup support at 2,325-2,300 continues to a be a possibility if 2,335 fails to hold and was yesterday's low.

The Nasdaq advanced 13 points, or 0.2%, to settle at 5,863. Tech made a morning journey north of 5,894 to push upper resistance at 5,875-5,900 but levels that held despite the bulls holding court all session. Support is at 5,825-5,800 on another move below 5,850.

The Russell 2000 climbed 5 point, or 0.4%, to close just under 1,367. The small-caps also held positive territory throughout Wednesday with the high checking in at 1,376. Upper resistance at 1,370-1,375 and the 50/100-day moving averages were cleared but also levels the bulls couldn't nail down. Support is at 1,360-1,350.

The S&P 500 Volatility Index ($VIX, 14.93, up 0.51) cleared upper support at 13.50-12.50 after kissing 13.46 intraday. The late day surge and 10% rebound off the low tapped a high of 15.15. Resistance is at 17-17.

From desk to press, futures look like this: Dow (+6); S&P 500 (+1); Nasdaq 100 (+3).

Dow/ S&P 500 Fall Below 50-day MA’s

Dow/ S&P 500 Fall Below 50-day MA's

8:00am (EST)

The selling pressure continued on Wednesday ahead of this morning's earnings parade from the financial sector along with heightened geopolitical concerns. The bears failed to make fresh lows for the week but are in control to get the weekly win.

The Dow declined 59 points, or 0.3%, to finish at 20,591. The blue-chips traded in negative territory throughout the session with the low reaching 20,553. Lower support at 20,600-20,550 held once again and for the 12th-straight close. Resistance remains at 20,750-20,800.

The S&P 500 fell 8 points, or 0.4%, to close just below 2,345. The index failed positive territory for the second-straight day with the bottom reaching 2,341. Support at 2,350-2,340 was split with a close below 2,335 a bearish development. Resistance is at 2,370-2,375 with a recovery of 2,360 today a possibly slightly bullish sign for next week.

The Nasdaq sank 30 points, or 0.5%, to settle at 5,836. Tech tested a high of 5,868 shortly after the open but the 2-point pop failed lower resistance at 5,875-5,900. The drop below 5,850 and low of 5,830 held upper support 5,825-5,800. A close below the latter would be a nasty development. The index is currently holding its 50-day moving average.

The Russell 2000 tanked 17 points, or 1.3%, to end at 1,359. The small-caps also held negative court throughout Thursday's action with the bottom tapping 1,358. Upper support at 1,360-1,350 nearly held with wiggle room to 1,345 on continued weakness. A close below the latter gets 1,325-1,320 in play. Resistance is at 1,375-1,380.

The S&P 500 Volatility Index ($VIX, 15.77, up 0.70) stayed elevated for much of the session with the bears pushing a high of 16.16. Resistance is at 17-17.50 with risk to 20 if this area is breeched. Rising support is at 14-13.50.

The last trading day ahead of Good Friday is typically bullish as the Nasdaq has closed higher for 16-straight sessions ahead of Easter. However, a strong move will be needed to regain Wall Street's confidence with the Dow and S&P 500 now below their 50-day moving averages. I often talk about stretch so let's see how the session goes.

CarMax (KMX) Technical Outlook Weakens

2:10pm (EST)

Futures were showing another lower open this morning as the bulls prepared for another backtest to support. The damage was minimal with near-term support holding as the bears continue to have their own issues with momentum. Market moving news has been limited but talks of rolling back more regulations, particularly Dodd/ Frank, and two new tax ideas have lifted Wall Street's spirits.

With 1Q earnings season just a week away, the catalyst for a clearer trend should emerge depending on the results and outlook. One company, on a different fiscal year cycle, that will report earning this week is CarMax (KMX, $55.89, down $0.78). Their 4Q numbers are due out after Thursday's close and the technical outlook is looking bearish heading into the event.

Shares are currently testing mid-November support at $55 with a close below this level getting $54-$52 in play. The 50-day moving average has begun a major downtrend slope that is easily on track to take out the 100-day moving average. This would form a mini "death-cross" once complete with the potential to grow into a full death-cross if the 200-day moving average is breeched, as well.

CarMax has reported a choppy prior four quarters after topping estimates by two pennies last time out. The previous three were a match, a miss by two cents, and a three-cents beat. Analysts are expecting a profit of 79 cents on revenue of $3.93 billion for the recently ended quarter.

The KMX April 55 puts (KMX170421P00055000, $2.25, up $0.30) are active today as nearly 1,000 contracts have traded. Open interest is over 5,000 contracts and the options expire in 17 days. At current levels, these options would double if shares fall below $50.50 by April 21st.

Although we do like the aforementioned direction trade, $2.25 is a rich premium to pay for an earnings to try and make 100% return. However, purchasing fewer contracts than what a trader might normally use could still be an option. Some option traders might stick to a 10-20 contract routine while others may deploy $1,000-$2,000 per position.

Of course, these limits can be higher or lower but trading an earnings announcement is always risky. Especially, if KMX tops estimates and provides a rosy outlook.

Heading into the final hours of trading, the Dow is up 18 points to 20,668 while the S&P 500 is off a point to 2,357. The Nasdaq is lower by 5 points to 5,888 and the Russell 2000 is slipping 2 points to 1,367.