After Friday’s sharp selloff into the end of the fiscal second quarter, markets are regaining their upward momentum from last week. Markets opened slightly higher today, but were met with aggressive buying from the bell. The S&P 500 rallied above last week’s highs and peaked near midday, but have given up a little of the rally since then. At present levels, the Russell 2000 is leading markets higher, up by about 1.6% for the day, while the S&P 500, Nasdaq, and Dow are all up about 0.9% each. The sharp bounce in metals and miners continues, as gold is nearly 2% higher for the day. Bonds are weakening slightly today, off about 0.2%, as the 10-year yield continues to hover around the 2.5% level.
CHART OF THE DAY
Citrix Systems (CTXS) – The networking concern has been weak this year, shedding about 8% of the company’s value since January. the shares recently bottomed near 57.50, site of former lows made in 2012 and 2011, and have since bounced slightly. However, this rally has come amid light volume and has taken CTXS back to its 20-day moving average. This trendline has acted as resistance since late May, and could continue to do so. Despite its relative weakness, sentiment toward CTXS remains very bullish, as 18 of the 26 analysts covering the equity have it rated a “buy” or better. This could lead to future downgrades, which would act as a headwind toward the shares.
I like a bearish entry here, with a stop on a close above 62.50. I would initially target a move back to 57.50, with 55 as a stretch target.
WHAT I’M EXPECTING
The S&P 500 again failed to retake and hold its 20-day moving average near 1625, so I’m looking for a push back down to 1600 before it decides its next course. My bias will remain on the short side until it can retake and hold the 50-day moving average, which is currently at 1632.