To no great surprise in these parts, Monday’s action in the broader U.S. stock market was lackluster. Those traders that actually made an effort to lug themselves to the office likely squared away a few more positions here and there ahead of the huge economic data and corporate earnings week ahead.
In other words, a week that contains both an FOMC announcement (Wednesday) and non-farm payrolls number (Friday) is not something many traders feel comfortable coming into leaning too much in either direction. Release the kraken!
There is decidedly little to say about Monday’s session, so let me once again point out the narrow trading range in which the S&P 500 has churned for 12 or so days, as evidenced by the Average True Range (ATR) at the bottom of the chart.
On the upper end, 1,699/1,700 is resistance, while support sits somewhere between 1,670 and 1,675. The ATR is still down at a measly 11 points, which is further supported with a sub-15 reading in the CBOE Volatility Index (VIX). Fear, it seems, is also on vacation.
Further regarding Monday’s price action, the bears will point to the transports, iShares Dow Jones Transportation Average (IYT), and the small caps, iShares Russell 2000 Index (IWM), which led the downward press, while the bulls will simply point to the fact that the market again held its immediate-term support. Personally, I argue Monday’s action simply doesn’t matter.
As discussing the broader U.S. indices seems somewhat redundant today, at least until we get more economic and corporate data this week, allow me to point out a few individual stocks that I am watching.
Monster Beverage (MNST) dropped almost 4%, all within the context of an upsloping, narrowing trading range. The stock has immediate support around $59.50, and a slip below there could get the bears salivating.
Coach (COH), which has been on my radar all year, continues to trade within the context of a tight pattern that has the chance to break higher. The $60 area is first resistance, followed by $62.50, above which the air is clear.
The company is scheduled to announce its latest earnings today, which is to say that anything can happen after the report, and I will have to evaluate a trade once the news has been digested.
Lastly, Starbucks (SBUX), looks overextended after its post-earnings gap up, and I would not recommend chasing it higher. A break below $72 may be shortable for the quick and nimble trader, while a move toward the $70-$71 area looks to be a better long-side entry point.
Today’s Trading Landscape
To see a list of the companies reporting earnings today, click here.
For a list of this week’s economic reports due out, click here.