World market and US stock futures are sharply higher Monday morning ahead of one of the most anticipated Fed meetings in the last couple years. Volatility in Japan continued as the Nikkei bounced 2.7%, and the S&P has followed suit with a 12 handle bounce pre-market. The S&P look set to open right back into the resistance level that has contained recent bounces.
Markets were extremely erratic last week, but ultimately ended lower for the third of the last four weeks. The S&P has formed another upper level wedge-type pattern for us to navigate. Back on May 22nd we had the bearish reversal day as the S&P put in a high of the day at 1687. About 10 sessions later we touched our 50-day MA and bounced pretty hard off it on June 6th. Last Thursday we retested that 50-day moving average and held it again.
As mentioned, we are opening right back into resistance and there is a pretty defined downtrend that stands at around 1640-1648 on the S&P. If you were thinking short and not committed to it, a close above this level should give you a few things to think about. Next resistance is 1658-1662.
All eyes will be on the Fed this week as it starts the important two-day meeting. Will they start the taper early, or stay the course until at least September? I discussed Fed policy on Thursday night with CNBC Asia: Fed Trying to Stop Markets From Overheating: Pro and Fed Tapering may Begin in September: Pro.
Some Tech names did hold up well and continue to provide two-way opportunities.
Google (GOOG) pretty much held where it broke out from around $865 and should be watched this morning. If the market holds up today, the next hurdle to GOOG would be a close above $885-891.
Amazon (AMZN) had a nice move last week then pulled back and retested that breakout area of $270ish. Now it needs to get back above $277ish in order to make another attempt at that $285 area.
Apple (AAPL) still acts weak. Watch to see if they try to sell this first. If it does hold up, it needs to close back above the 50-day around $437 to get some eyeballs again.
Netflix (NFLX) had a nice Red Dog reversal late last week at the 50-day MA. In order for this to be more than a choppy trade it needs to get and stay above $220ish.
Priceline (PCLN) hangs around pretty well but I don’t typically do well with it. Above $817ish it could continue higher.
LinkedIn (LNKD) woke up Friday, showing some relative strength above $175. If it can stay above that level and build another base, it could become compelling again.
Yahoo! (YHOO) seems like it’s putting in a new floor above $25.50. In a positive environment, I think this is a stock you can turn to.
Elon Musk stocks continue to provide opportunities.
Tesla (TSLA) closed back above $100 Friday. If it stays above it, the next pivot to hold above is $102.50-103.50.
Solar City (SCTY) survived its lock-up expiration last week, and now I think it could be ripe for a bounce. When a stock holds up well on its lock-up expiration when many expect it to go lower, I think it could then lead to squeeze. It did get back above $35.50, which put the shorts back on their heels a bit. Now it has upside room.
Today will be interesting. Lately the trade has been to do the opposite of the overnight futures. I’m not sure if that will be the case today. I’d give the market at least 30-60 minutes before you commit new capital both long or short. I maintain my opinion that the highs of the year are not in, but I come in today flat and looking to navigate shorter-term trends.
Disclosure: Scott Redler has no positions
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