Keep Exposure Down Until Range Resolution

There are some red arrows around the World as the markets and the Fed continue to send some mixed signals on direction. Europe is bending a bit as some red days are adding up. Asia was disappointed with Plenum as it seemed like most wanted more details. Shanghai is down 1.83% and Sydney hit a four-week low. The Nikkei was able to hold in a bit better only down 0.01%.

Fed governors continue to come out and say QE can’t stay forever and now the debate is whether the taper happens in December or March. We’ve been talking about “higher rates” since December 2013 so I hope you have a plan as that transpires at different speeds.
Bernanke might make some headlines today and Yellen has her chance tomorrow.

Our markets are trying to hold this upper level as trading is very thin and somewhat random at this stage. It feels like most traders have one foot in the door and the other ready to run if need be. The S&P 1760-1762 level is a good area to trade against. If we close below that I think some could lose faith in this upper level and perhaps get more “neutral to negative.”

However, there is no reason to have “short on the brain” unless we get a potent move below 1746-1750. The longer we hold higher, the greater the probability that some will have to adjust again if we take out 1775. It’s a very narrow rally some stock selection has mattered even more recently.

In today’s Morning Call I will look at high beta tech.

Apple (AAPL) has been finding support along its 21-day EMA. The stock closed right around its 8-day at $520ish yesterday. The chart looks okay and is trying to stay interesting. It needs a high volume break above $525ish to potentially get it going. Most have stops set in the $512-515 area.

Google (GOOG) found support at 1005 and closed around the flat line yesterday, but it failed to reclaim the 8-day EMA which makes it looks a bit tricky. It needs to break above yesterday’s high of $1017 to get some upside momentum.

LinkedIn (LNKD) has been grinding lower since earnings. It’s trying to hold the recent pivot low of $208. Use this is the new point of reference to trade around. A break below and the 200-day could come into play at $197ish.

Facebook (FB) broke the key support level of $47.30 on Monday, came back to retest then failed yesterday. The longer it stays below $47.30-47.60, the higher the probability it could see lower prices.

Amazon (AMZN) has been having trouble breaking back above the breakdown level of $355ish as this is becoming some resistance now. The stock closed on lows and could see some down side follow-through below $347.28.

Netflix (NFLX) continues to hang around and if high beta stocks catch a bid then $339-$345 is the action area that could trigger additional momentum.

Baidu (BIDU) hasn’t acted right since earnings, be careful there. Important support is $142.70.

Twitter (TWTR) is trying to build a range to navigate, but it needs time to develop.

Tesla (TSLA) CEO Elon Musk was interviewed last night and said there will not be a recall. The stock is up on the news and has some room to $145.24 then $149.27 if it holds today’s gap.

Pandora ( P) has a nice chart and is trying to break out. The trigger level to watch for potential continuation is $28.36.

The semiconductors look interesting if the market holds up.

The Semiconductor ETF (SMH) has been forming a descending channel that could see an upside resolution if it could break above $40.80 for a potential quick move back to retest the current 52-week high of $41.43.

Texas Instruments (TXN) is building a nice upper level base above $41.50 to digest the big move from $39 in late October. The longer it holds above $41.50, the higher the probability we could get a trade through $42.30.

Intel (INTC) had a nice move up yesterday after basing above its 21-day EMA for about a week or so. The stock could see some continuation above yesterday’s high of $24.50. The next pivot to watch after that is $24.73.

Applied Materials (AMAT) continues to travel in a tight upper level range since the earnings gap on September 24. A break above the pivot high of $18.17 could resolve this range to the upside. It has earnings Thursday after the close.

Broadcom (BRCM) had a “Day #1” yesterday, now see if it can clear $27.33 for some continuation.

Qualcomm (QCOM) was upgraded to conviction buy at GS. Its pivot high is $70.19.

Banks pulled in a bit yesterday. I would think the Bulls would want to defend XLF $20.55 area.

Casinos look okay as some like Las Vegas Sands (LVS) was upgraded this morning.

The 2X Inverse Bonds ETF (TBT) continues to hold that gap from 11/08 and feel higher.

Metals continue to grind lower as the 2013 downtrend has controlled this.

Many traders are getting frustrated with this choppy tape, but remember there’s no reason why you can’t keep it smaller with low exposure.

Disclosure: Scott Redler is long TSLA, P, AAPL, BAC, LVS, XLF. Short SPY.

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