Markets are again higher today, after Friday’s volatile intraday session on the heels of the May employment report. Volumes are light across the board, as it appears many market participants are still on vacation from last week’s shortened trading. Futures were significantly higher ahead of today’s cash market open, but equities have since faded slightly. Currently, the Russell 2000, Dow, and S&P 500 are all about 0.4% higher, while the Nasdaq is severely lagging today, off 0.2% on the session. Much of this weakness could be attributed to Intel (INTC), which was downgraded and is lower by about 4% today. Bonds are catching a bid after Friday’s swoon, and are about 0.9% higher today, while metals are also up about 1%.
CHART OF THE DAY
EMC Corporation (EMC) – The information infrastructure company has been weak this year, shedding about 4% since January. Despite its weakness, sentiment toward EMC continues to be very bullish. In fact, 26 of the 28 analysts covering the company currently have it rated a “buy.” This extreme bullish alignment is a good indication of an overloved, underperforming name, and offers a nice contrarian play from the short side. Given that the equity has respected its 200-day moving average fairly well so far this year, the current bounce into it offers a great risk/reward setup.
I like a bearish entry here with a stop on a close above 25. I would initially target a move down to 22, with 20 as a stretch target.
WHAT I’M EXPECTING
Choppy, range-bound action this week. Barring some sort of news shock, there isn’t much in the way of a market catalyst to break the recent range. Given that correlations are still low, the great stock-picking environment of the past few months should remain, and offer opportunities on both sides of the market.