The Shanghai Composite rallied 2.6% as China released a new stimulus package. Most indices bounced back after a two weeks of selling. The Oscillator went from +60 on September 14th to -30ish yesterday as the S&P went from 1474 down to 1430. A 44 handle move off the highs is usually a spot to cover some shorts and nibble on some longs. If the year were to close today the S&P is up 14%+ and the Nasdaq 18%+ and still everyone seems to be complaining about the markets.
Anyway, it would be nice if yesterday’s low sticks moving forward. At least we have a new point of reference (1430) to trade against. Under this level was very big support around 1422-1426. Micro resistance stands at 1435-1436, and a close 1440-1442 could get rekindle some upside momentum. If the bears want this pullback to continue, they can’t let bulls take back 1449-1451.
High beta tech lost some momentum last week. Most stock fell below their 8- and 21-day moving averages, which leads to a slowing of the intermediate-term rallies (meaning you can’t just buy every dip and add on break outs). This timeframe is more selective and there is two-way action. Most of these stocks are still above their 50- and 100-day and macro investors need not worry.
Google (NASDAQ:GOOG) is much stronger than Apple (NASDAQ:AAPL) overall, as the only real pull-in for GOOG was from intraday highs on Tuesday. AAPL retraced all the way to its lows from the iPhone 5 event day. In keeping with that trend, AAPL is set for a flat open while GOOG looks like it will open higher this morning.
Oil was the hit the hardest on September 17th giving clues that there was more weakness to come. United States Oil Fund (USO) put a small bottoming tail in yesterday at $32.98, let’s see what type of bounce it gets. Lots of resistance piles up around $34.40-34.60.
Metals looked ready for a pull-in after some short-term toppy action on Tuesday. Gold (GLD) broke lower early yesterday but closed off lows. It held Support#1 above the 21-day MA and now we have a new pivot to trade against: $168.34.
I did break a rule or two yesterday by buying some stocks into the weakness around 3:50pm. If you fasted yesterday, I hope it was an easy one.
Disclosure: Scott Redler is long SPY, AAPL, LVS, GS.