Sellers Greet Baffling Gap Up

The market tumbled lower today after the large gap up in the morning that was sold immediately. It was a potent bar lower in the indices as they closed the day on lows with the Nasdaq sliding 1.06% and the Dow and S&P both closed down 0.84%.

After yesterday’s nasty gap down in the market that resulted with a close on lows, our short-term view became more bearish on the short-term as the market felt vulnerable to lower prices. There was a large travel range in the S&P today from the morning high to the afternoon low. It is tough to initate new shorts after this type of move as the trading oscillator reaches oversold levels. It would seem as a bounce back into resistance could most likely be shorted.

Some key levels of resistance to know to judge the overall temperature of the market are 1620-1622 which lines up with yesterday’s low and bigger resistance is 1630-1634. Use today’s low of 1610 as your new short-term point of reference which also corresponds with the 50-day moving average.

At this point, after scanning many charts in many different sectors, there are not as many bullish looking charts out there. There are some key stocks that are breaking down and other leading stocks that look vulnerable to lower prices as they rest of upper level support. Yesterday’s action signaled to traders to clean-up excess longs and take a more tactical approach to the market.

Disclosure: Scott Redler is long SPY puts

About Scott Redler 367 Articles

Scott Redler is the Chief Strategic Officer of T3 Live. He develops all trading strategies for the service and acts as the face of T3 Live. Mr. Redler focuses on thorough preparation and discipline as a trader.

Mr. Redler has been trading equities for more than 10 years and has more recently received widespread recognition from the financial community for his insightful, pragmatic approach. He began his career as a broker and venture capitalist where he was able to facilitate relationships that led him into trading. Beginning his trading career at Broadway Trading in 1999, Mr. Redler moved on with Marc Sperling to Sperling Enterprises, LLC after establishing himself as one of the best young traders in the firm. As a manager at Sperling Enterprises, continued to trade actively while working closely with all traders in the firm to dramatically increase performance.

Mr. Redler has participated in more than 30 triathlons and one IronMan, exhibiting a work ethic that also defines his trading. His vast knowledge and meticulous attention to detail has led to regular appearances on CNBC, Fox Business, Bloomberg, and he is a regular contributor to Minyanville and Forbes’ Intelligent Investing blog. He has been quoted in the Wall Street Journal and Investor's Business Daily, among other publications.

Scott received a B.B.A. in Marketing/Finance from the State University of New York at Albany, graduating Magna Cum Laude from Albany's School of Business.

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