World markets are mixed this morning, with Asian markets continuing to bounce back while European markets are off a bit. US stock futures have been higher all morning, but are slowly fading back down to near the flat line. If we do open higher today, it will be the fifth straight gap up. Yesterday we opened higher and the S&P tried to reclaim its broken trend line, but ran out of gas right around the 50-day MA. We did trade into the gap from June 20th, but then faded in the afternoon to create a small topping tail. The Nasdaq outperformed substantially.
If we do push higher this morning, SPY has some resistance at $162.48 then $163.38. If they sell this open, then yesterday’s low of $161.08 will be key to watch for short-term composure. Mid-level support stands at $159.86, which could be the line in sand for most active traders. If we get a close below that level and some will be calling for a re-test of the Summer lows.
Recently this has been more of a “market of stocks” rather than a “stock market.” There have been some significant divergences that should be your focus. The basket of stocks we track has been pretty active as we rotate some stocks in and out based on how they performed during the recent corrective activity.
We’ve focused a lot on Tesla (TSLA) during the last month or so, and yesterday it surged almost 10% to make another new all-time high. TSLA is a great example of “relative strength” and technical patterns, combined with concepts like understanding short interest. During this correction the stock held all moving averages and then blasted off yesterday.
ExOne (XONE) has also a big focus of our team (especially Steve Levay in Momentum Trader Mentoring Room). The 3-D printing stock held in great and is now at new highs after a multi-day extension.
Many leading tech stocks continue to outperform and form upper level bases.
Amazon (AMZN) can be a tricky stock, but has been holding in great this year. To me, it seems like it could be only a matter of time before it blasts above $284-285.
LinkedIn (LNKD) continues to work on a high level base and looks like it could continue if it trades through $183.75 for additional cash flow.
Netflix (NFLX) held where it had to and exploded yesterday. The stock still looks good in the upper level base.
Apple (AAPL) finally woke up Friday with a nice RedDog reversal. Yesterday it gapped up and extended. It seems like the next resistance spot to watch is $416-419.
Priceline (PCLN) also continues higher and is near historic highs.
The precious metals are on Day 3 of their bounce back. We talked about the potential for a counter-trend snapback after extreme damage in the metals, and it provided a nice tactical entry on Friday. I think it could continue, but I would trim and trail any counter-trend position.
Banks are lagging a bit overall, which bears could point to as a red flag on this recent bounce.
Goldman Sachs (GS) seems to be the weakest bank for now. Some could try to short it if it breaks below $151.00-151.50.
Morgan Stanley (MS) is also weaker. If it trades and closes below $24.40ish it could be worth a look short if the market fades.
JP Morgan (JPM) acted a bit better and was upgraded today. See if it can hold it or if there are true sellers. Use $52.43 as a stop for active guys.
The 20+ Year Bond ETF (TLT) has been bouncing back a bit (TBT has been pulling back). I believe you could potentially look to re-buy the TBT around $70.75-71.50.
Disclosure: Scott Redler is long AAPL, AMZN, TSLA, YHOO, DDD, SLV. Short SPY.