“SANTA? I KNOW HIM!!!”
Will Ferrell, Elf
I'm very disappointed that Netflix (NASDAQ: NFLX) doesn’t have “Elf” available for Christmas. It’s just rude. I suppose the movie is too expensive, and we know that Netflix is grappling with expenses and slowing subscription growth. Still, would it kill them to give the people what they want?
At least it looks like Nike (NYSE: NKE) has what we want for Christmas, and FedEx (NYSE: FDX) is delivering it.
As I wrote yesterday, it appeared that a window of opportunity was opening for an upside move. The S&P 500 managed to find support at 3,820 on consecutive days. All that was missing was a reason to get excited about it.
Earnings from Nike and FedEx last night might do the trick…
Both companies are bellwethers of a sort. Nike is considered a decent measure of consumer health – if budgets are tightening, consumers will opt for $30 Marshall’s (LON: MSLH) shoes instead of $120 Nikes. And the number of packages that FedEx ships are a decent measure of the global economy.
Both companies delivered upside earnings surprises last night, Nike shares are up +10% in pre-market, and FedEx is up +5%.
After the sharp selling we’ve seen over the last week, we need a little “Santa Rally” action for investors to start thinking, “eh, maybe it’s not so bad out there…”
The 50-day moving average (MA) for the S&P 500 sits at 3,871, and the 200-day MA is up at 4,022. It appears the S&P 500 will retake the 50-day MA at the open. The real test will come at the 200-day MA. We’ve already seen two pretty spectacular failures at the 200-day MA this month, the last of which kicked off a 7.5% drop for the S&P 500.
It’s probably too much to ask for a move above the 200-day MA this week. But if a Santa Rally takes hold, we could see a move over 4,022 and perhaps a challenge of recent highs at 4,100 next week.
Amazon (NASDAQ: AMZN) remains a solid choice to make a 10% run here. There is moderate resistance at $91, and the 50-day MA is up at $98. Amazon hasn’t sniffed its 50-day MA since back in September, and if there’s any good news about holiday spending, Amazon shares will benefit.
Bank of America (NYSE: BAC) has also popped up on my trading screen. It has a pretty clear path for a move to $33.50. And yesterday, I picked up a few $33 strike call options at $0.10 that expire this week for a quick trade.
That’s your “Morning in the Markets” for today, take care, and I’ll talk to you tomorrow.
Until next time,
The Profit Sector