There are some green arrows around the world as there is some relief that if there is going to be some type of military strike in Syria, it can’t happen until UN inspectors leave on Saturday at the earliest. Keep an eye on the US GDP reading and jobless claims later as data will be increasingly scrutinized as we get closer to the tapering decision.
Yesterday we came in with markets oversold a bit and the market had a mini Red Dog Reversal. Sometimes reversals lead only to cash flow moves, and sometimes they lead to something bigger. At this point I think it’s just a small relief bounce, but we shall see.
S&P futures are up 2-3 handles with a new range for us to navigate. The new pivot low to trade against is 1627. There’s some micro resistance at the 100-day and yesterday’s high around 1638-1641. If we do get a close above this, perhaps the bounce could continue up to the 1648-1652 zone. I think quick and nimble is the way to be until the Fed’s rate decision, especially considering the possibility for strikes to commence over the weekend of early next week.
In today’s Morning Call we will look at some energy stocks that were moving yesterday.
XOM broke above its lower pivot with a powerful move yesterday as the stock gained 2.33%. Look for potential continuation to the upside given the speed and power of yesterday’s move. It might need a digestion day or so, but it has more upside room.
CVX also had nice gains of 2.53% to reclaim all key moving averages. This stock led the way yesterday. Look for potential upside follow-through in the coming sessions.
EOG broke out of the weekly descending channel last week and continued higher yesterday. A break above $161.47 could lead to higher prices.
SLB poked its head out of the weekly consolidation range. Look for potential continuation above $83.30.
Some of our “go-to” names bounced most impressively yesterday.
On FB we highlighted the support level of $39.32 to gain 2.14%. As long as the market continues to hold and the headlines are out of the way, this could be one of the first stocks to make new highs
LNKD still acts very well. Holding above $234 is constructive, and with more time it could get back in motion above $242ish.
NFLX continued to hold above its 8-day, showing impressive relative strength. The longer it holds above $276.40, the higher the probability we could see a new high above $289.95- $300+.
BIDU is building a nice base and continues to show nice commitment to the upside since earnings. The longer it stays above $133ish the higher the probability it could see a new high here above $143.
AAPL held where it had to yesterday. Active traders traders could use $486 to trade against. It will be interesting to see if it can get back above $498-$502 to get back on track.
TSLA opened higher but faded into the close. The stock showed some signs of exhaustion. A break below today’s low of $163.25 could lead to a retest of the 8-day at $158.90ish, which could be a better buyable spot.
GMCR continues to act very well. The next action pivot for new highs come in at $88.63ish.
Metals had a heck of a run and could use a rest.
GLD held up yesterday but the rally feels a little long in the tooth. It is opening a bit lower this morning. There is a gap to fill down to $135.60 and it’s extended from the 8-day MA that stands at $134ish.
For SLV we talked about how $18ish is a better buy than sell. Now I think $24ish is a better sell than buy. A pullback to at least $22.70 could be in the cards, perhaps even a little lower.
TBT – after breaking below its 21-day MA for the first time in a while we need to see how long it takes to reclaim it to measure strength. That level currently stands around $78.35ish.
USO broke out of the monthly range with a powerful gap Tuesday. It continued higher yesterday and could be something to watch with the Middle East unrest. Let’s see if the gaps holds or was it “emotional.” There is now some support at $38.20-38.40.
This is an interesting spot in the markets. The S&P has pulled back almost 5% off the highs. So far this is the type of correction we’ve seen a few times over the past couple years that has ultimately been bought. There are a lot of people out there saying this one will “be different” to the downside. At this point nobody truly knows. If you are a long-term player, stick to your macro plan. If you trade intermediate trends for a living I would still be light on your feet as we need to see some more action.
Disclosure: Scott J. Redler is long AAPL, TGT, SPY. Long GLD puts.