Futures were sharply lower overnight, as the S&P 500 June contract tested its lows of 1598 from last week, but has since bounced dramatically from there. In fact, equities are currently near their highs of the day, and about 1.5% higher from the lows seen at about 3:00 this morning. Currently, the Russell 2000 is leading markets higher, up about 1% for the session, with other market indexes trading northward by about 0.6%. Despite the strength in equities, bonds are sharply higher as well, up about 1%. Metals are seeing some weakness, down about 1% on the day, while volatility is getting crushed. The VIX is trading about 9% lower from its closing levels from yesterday.
CHART OF THE DAY
Akamai Technologies (AKAM) – The cloud computing concern has been on a tear as of late, up about 25% since bottoming in April. The shares recently gapped higher on better-than-expected earnings, and have since pulled back near the 42 level, site of former resistance. This area could act as support going forward. Short interest on AKAM has recently plunged, but remains elevated. This creates the potential for continued short covering, which could act as a tailwind going forward.
I like a long entry here with a stop on a close below 41.50. I would initially target a move to 46, with 50 as a stretch target.
WHAT I’M EXPECTING
I’m looking for a continued choppy environment for the foreseeable future. The overnight lows that were successfully tested show that bulls won’t go down without a fight near the 1600 level, and bears continue to defend the 1650 area. Until some sort of catalyst emerges to break this range, it’s likely that we remain trapped here for a bit.