January 6, 2010 11:00 AM
After Monday's explosion through 12-month highs, stocks treaded water yesterday as traders caught their breath and appraised the current state of the market.
"As goes January, so goes the rest of the year," has been one of those oft-repeated sayings on Wall Street for decades. If that's the case, then the year has blasted off to a strong start.
Even yesterday's mild hesitation is to be expected, as investors study the various possible stock and sector choices before making the leap of faith. Before that leap, traders usually want to know what immediate risks versus rewards there are at the current trading level.
For the Dow, the current support starts at the breakout level of 10,500 and has a bottom at 10,300. Within that trading spread are both the 20-day moving average and the 50-day moving average. A penetration of this zone [to the downside] would be serious enough to have traders liquidate positions at small losses since the near-term trend would be in doubt.
For the S&P 500, the current support starts at the breakout level of 1,135 and has a bottom at 1,090. Within that trading spread are both the 20-day moving average and the 50-day moving average. A penetration of this zone [to the downside] would be serious enough to have traders liquidate positions at small losses since the near-term trend would be in doubt.
Now we have some idea of the risk... so what is the possible reward?
First, the market clearly demonstrated by Monday's action that the bull market has been newly confirmed and the market is in a powerful uptrend. Traders will want to watch specific targets to take profits, like the first area of resistance at Dow 10,500 to 11,150, and then to 11,800. But longer-term investors may wish to hold for even bigger gains since the indications are strong that sometime within the next two years the Dow could reach its former high of 14,000 plus.
Trading Alert on Our Core Holdings
Microvision [MVIS]: Over the last three trading days, the MVIS stock has moved up very quickly from $3.07 to $3.60 this morning on some heavy volume indicating institutional buying.
There are essentially two reasons...
1. There is some favorable press release from Microvision this morning before the start of CES 2010 Expo. Here’s the link...
“Interest and demand for this product is very strong and we’re excited to have the SHOWWX as our center piece at CES,” stated Ian Brown, Microvision Vice President of Sales and Marketing. “We have created a unique and engaging presentation for attendees which is sure to drive awareness of the product’s key features and benefits. We look forward to introducing the product in additional customer channels during 2010, with a planned Microvision direct campaign in the U.S. targeted for March.”
2. Last night, Microvision was at the CES media event called “CES Unveiled”. Over 800 media attended to get their first peak at some of the top innovations being exhibited at CES. SHOWWX was awarded a 2010 CES Innovations Honoree Award in the mobile accessories category, and as a result they garnered a lot of attention from the press. At times there were twenty people deep in front of Microvision demo area. According to CES there are over 6000 registered media coming to CES, so on the media front Microvision will be very busy and expects to get extensive media coverage. Today Microvision will be finishing the build-up of their tradeshow booth and add final touches to their presentations for the week. Expect to see both video and photos posted at Microvision blog at The Displayground...
Quirky, innovative gadgets have chance to shine at CES...
Media coverage at CES 2010...
CES 2010 Expo is conducting an on-line contest named “Last Gadget Standing” and Microvision’s laser PicoP projector SHOWwx is currently the front runner among the top 25 contestants. If you’ll be in Las Vegas this week, raise your hand — to help crown SHOWwx as the “Last Gadget Standing” on Saturday, 10:30 a.m., Jan. 9, in Room N255-257, in the Las Vegas Convention Center’s North Hall.
Here's the link to a brief interview with Alexander Tokman. Topics include CES 2010, the SHOWWX™ laser pico projector and PicoP® embedded technology...
Recommendation: Maintain long position with our core stock holding and add at prices below $3.48.
Apple [AAPL]: Maintain [net] long position with our options income strategy. However, keep an eye for the next resistance level at $215 on the chart.
Emerging Markets ETF [EEM]: Maintain [net] long position with our options income strategy. However, keep an eye for breakout from the triple top formation at $42 on the chart.
Our current Model Portfolio is cautiously bullish and is 50% invested in stocks and options... with the rest in cash. There is no need for further diversification at this time.