It seems like equity markets around the World are still “lost in translation” since the Fed’s lack of action last week. The red arrows continue as most markets are bending, but far from broken. While we have been down several days, nobody wants to buy too early as one of these times they feel like they could get run over.
US futures are off small after four down days. Most relationships that traders were starting to trust got blasted last week and now it seems like there is a disinterested caution in the air. The S&P hit 1729 last Thursday and then failed to hold 1709 and now we are in a bit of “no-man’s land” below the 8-day but above the 21day.
Yesterday’s low is 1694, which is your pivot for tactical action, with the 21-day down at 1685ish. The 1674-1679 level is truly the spot that more intermediate-term guys could get worried about if we don’t hold in the coming week or so.
I will continue to look for Red Dog Reversal type reversal tactical trades but I will try to keep it small. Yesterday we did get a small RDR, but if you didn’t trim it near the highs of the day, and added to it, you definitely felt a bit frustrated. We might be in a tape that you can buy weakness vs. levels but not add on strength, or just play stocks that show extreme relative strength and avoid the rest.. Lots of experienced traders are deciding in a tape likes this to keep low gross-low net until we get more clarity.
Banks have been a drag as the FInancial ETF (XLF) t didn’t make new highs with the S&P, giving clues of potential weakness. Use yesterday’s low in the XLF of $19.99 for a potential tactical reversal.
JP Morgan (JPM) is the one in the news and has a big macro Head and shoulders pattern. The $50-$50.50 area is a pretty big support level that needs to hold or there could be more trouble there.
Homebuilders are trying to re-again their footing as some news of decent demand even in the face of some higher rates. The Homebuilders ETF (XHB) needs to hold above the 21-day of $30.14 otherwise it could see more downside.
We will look at high beta tech in the Morning Call as usual for two-way action
Facebook (FB) continues its impressive run as big firms continue to come out each day with higher price targets. Yesterday it gapped up on the news that China will decrease censorship. FB hit a high of $49.66 before selling down. It’s very extended. See if it digests above the gap of $48.16. Some might even try a cute short if it shows some rare weakness for a trade to fill it. We’ve given many technical spots to get involved in this name, now it’s very tricky.
LinkedIn (LNKD) had a quick move up right off the open to get back above both short-term key moving averages, the 8- and 21-day. The stock did fade with the market in the afternoon, but managed to hold 50% of its intra-day gains to register 2.60% gain. Holding above the 21-day at $243.70ish would be constructive for higher prices in the coming sessions.
Baidu (BIDU), after basing above its 8-day moving average for about two weeks, put in a new high of $154.72 yesterday. However, the stock gave back most of its intra-day gains on the afternoon pull back. It needs to hold above $147 to keep its momentum intact.
Amazon (AMZN) has been basing nicely above its 8-day and held in well yesterday as it registered small gains of 0.85%. It has seen decent digestion after last week’s potent break out. Holding above the new upper floor of $309-311 would be healthy.
Netflix (NFLX), after having a sharp pull back on Monday, looks like it found some footing at $300 level. NFLX gained 1.5% to close back above its 8-day moving average. Building a base above $298- $300 would help set up additional potential entries going forward.
Tesla (TSLA) knocked on the door of new all-time highs again yesterday after a few days of rest to digest the recent break out above $174ish. A break above $184.96 could bring in more buyers for an additional trade.
Apple (AAPL) has turned into a “gap and do nothing” stock and is a little frustrating. I guess it’s worth a look long to go positive today. it needs to hold the gap of $482ish, or at least close above it, to stay interesting.
Metals gave back most of last Wednesday’s move that was based on the Fed inaction. It seems like both the longs and shorts are frustrated there. There is not much to say, but you could say support in the GLD to trade against lies at $126.34 and it could get a push above $128.20ish.
The Bond trade changed last week and the TBT short-term composure changed on Fed Day when it broke below $79.50. Now it is on the fourth down day, $71.50-$72.50 could be a spot to look for a re-entry.
Congress is a circus. They all make above $100k and get health care for life, and there are clips of them on TV reading Green Eggs and Ham. I guess it’s our fault as we do vote for them, or not.
We can’t “really” control Washington or the Fed, just our keyboard and process. Don’t let frustration turn into unfortunate losses. I’m keeping it small for now.
Disclosure: Scott Redler is long SPY, BAC, GE.