Markets are chopping aimlessly today, as neither bulls nor bears have succeeded in taking control of the market over the near term. The S&P 500 initially sold off sharply on the open, but buyers stepped in and rallied stocks back above yesterday’s close. However, some negative news from Wal Mart (WMT) just surfaced, and that potentially has negative implications for the economy as a whole. As a result, we’re once again pushing back near the lows of the day. Despite weakness in other indexes, the Russell 2000 continues to hold up fairly well. For the day, the index is higher by about 0.2% at present levels. The Dow is today’s laggard(largely a result of WMT weakness), off by about 0.4% on the session. Bonds are trading near breakeven, while metals are higher by about 1%.
CHART OF THE DAY
ARIAD Pharmaceuticals (ARIA) – The pharmaceutical concern has underperformed the broad market this year, trading near breakeven, but there are signs that it could be forming a tradable bottom. The shares recently spiked to fresh 2013 highs and have since consolidated, offering a nice entry from the long side. Short interest remains elevated at over 10% of the company’s float. This creates the potential for short-covering rallies going forward. ARIA is currently sitting near its 200-day moving average, which has acted as resistance numerous times over the past few months. With the shares now sitting on this trendline, it could act as support.
I like a long entry here with a stop on a close below $18.50. I would initially target a move to 21, with 23 as a stretch target.
WHAT I’M EXPECTING
Longer term, I still believe that the bulls are in control. For that reason, I continue to think we’ll take out the all-time highs on the S&P 500 in the near future.