Markets continue to trade in their volatile choppy fashion, as technical support and resistance levels are providing bookends for price action. This morning, the S&P 500 rallied into its descending trendline from the highs made on 5/22, and sold off from those levels. Since then, stocks have been hit fairly hard, and are currently trading near their lows of the session. At present levels, the Russell 2000 is leading markets lower, down 0.9% on the session. The Nasdaq, Dow, and S&P 500 are each lower by about 0.7%. Bonds are flat today after a big move up yesterday, and metals are slightly higher.
CHART OF THE DAY
Valeant Pharmaceuticals (VRX) – The specialty pharmeutical concern has been on a tear as of late, up about 40% since the beginning of the year. The shares recently moved significantly higher on news that it would acquire Bausch and Lomb, and have since consolidated nicely. This pullback offers a nice low-risk entry from the long side.
I like a long here with a stop on a close below 82.50. I would initially target a move to 90, with 100 as a stretch target.
WHAT I’M EXPECTING
Continued choppiness until Wednesday, where we’ll get the newest FOMC Policy statement. Markets have been hanging on every mention(or lack thereof) of “tapering,” and hopefully we’ll get some clarity next week. Until then, continue to play the 1600-1650 range on the S&P 500.