MARKET CHECK

Near the open this morning, futures were on the lows, and it appeared that markets could break down today.  However, as we’ve seen numerous times over the past few weeks, dips continue to be bought, no matter how shallow they may be.  Currently, markets are near their highs of the day, as the Russell 2000 continues to make new all-time highs.  At present levels, the Russell 2000 is up 0.2%, with the S&P 500 and Nasdaq both near flat on the day.  Metals are weak again, with silver down 1.4% on the day and gold down 0.6%.

While the ghost looks clear on the equity front, there is one indicator that may be signaling equity weakness–bonds.  At 1:00 today, there was a 30-year auction, which was met with heavy demand.  As a result, bonds are near their highs of the day, up 0.8%.  This should be monitored closely, as further strength in bonds could lead to some weakness in equities.

CHART OF THE DAY

Expedia, Inc. (EXPE) – The travel concern has steadily trended higher for many years now, and is up about 7% year-to-date and a whopping 91% over the past 52 weeks.  After making a new all-time high last week, EXPE has consolidated nicely back near its 20-day moving average, a trendline that has guided it higher since last November.

Despite its strength, sentiment on EXPE remains skeptical.  Currently, nearly 9% of EXPE’s float is sold short.  Additionally, 11 of the 18 analysts covering the equity still have it rated a “hold.”  Capitulation by these holdouts could act as a tailwind toward EXPE in the future.  Lastly, there is heavy call open interest at the February 65-strike that expires tomorrow.  These options could potentially be capping the shares into expiration, and EXPE could see a pop early next week as the March options series is very light on the call side.  I’d look to enter here with a stop placed on a close below 64.  The recent all-time highs at 68 are the primary target, with a move up to 70 and above as a stretch target.

courtesy of stockcharts.com

WHAT I’M EXPECTING

Choppy action into tomorrow’s expiration.  It will be tough for the S&P to take out its highs near 1525 without a catalyst.  At current levels, markets are pressing against resistance, and I’d be hesitant to jump in on the long side of indexes.  However, individual names still offer good opportunity.