Last week proved to be very eventful, as the selloff into Friday’s jobs report was reversed, and market indexes actually eeked out a small gain on a weekly basis. While we saw a great deal of volatility last Thursday and Friday, today is exactly the opposite. Markets are trading near breakeven after a fairly uneventful weekend, and are digesting much of what we saw last week. Currently, the Russell 2000 is leading, up about 0.4% on the day, while the S&P 500, Dow Industrials, and Nasdaq are all trading near breakeven. Bonds are getting hit today, lower by about 0.5%, and metals are seeing a slight bid after Friday’s swoon. Gold and silver are each about 0.5% higher.
CHART OF THE DAY
Expedia, Inc. (EXPE) – The travel concern has seen some weakness as of late, after a strong four-year rally since the beginning of 2009. In fact, EXPE is actually about 10% lower since the beginning of the year, and underperforming the S&P 500 significantly. Despite its recent weakness, sentiment toward EXPE remains very bullish. Short interest is currently near multi-year lows, and traders are buying calls over puts at a pace that’s near a bullish extreme. The recent weak price action amid very bullish sentiment creates a nice contrarian bearish play here and now.
I like a bearish entry here with a stop on a close above 58. I would initially target a move down to 55, with 50 as a stretch target.
WHAT I’M EXPECTING
Some choppy trading early this week, before a move back near 1600 on the S&P 500. I remain in the disbeliever camp with respect to last week’s surge into Friday, but will reverse my stance if and when the S&P can retake and hold 1650. Until then, it’s tough for me to get extremely bullish, as we saw a 3% “technical” bounce between midday Thursday and Friday’s close.