US stock futures are down are 0.9% Tuesday, following through on yesterday’s underlying weakness. The never-ending Greece saga is plaguing the market once again amid renewed concerns that the nation and its bondholders may not meet an imminent deadlines to complete a debt swap. The possibility of a default is still on the table, which would likely lead to damaging contagion in Spain and Italy.
Markets had me feeling like an amateur yesterday as it stopped me out of most of my remaining longs, and had me second guessing going net short. That’s what the market does, it tries to make as many people feel uncomfortable as possible at the same time. We’ve been talking about the 10day moving average for two months and yesterday we closed below for one of the rare times this year.
We also saw some weakening signs over the past few days to give clues that this time we might get the “retracement” or “pull back” that has eluded this market since the December 20th gap and go. The bottom line is, if you follow a set of rules and stick to them with discipline, you might curb your upside but you’ll never lose control and expand your downside.
Futures are opening below the 20day moving average which stands at 1358. The 1352-1354 level is some decent support (an area where I will cover most of my shorts). There is a much bigger level that stands at 1338-1342. This would be a surprising spot to hit today. If we do get there, I would be looking to buy here. The 50day moving average stands at 1319.
Apple (AAPL) broke below the upper pivot yesterday and triggered for some short below $342.50 and then found some support at the 10day moving average. Use $526-$527 as a pivot to trade against today. See if it can show a divergence to perhaps go positive for cash flow. If it stays below this pivot the next big Support area is $510-$514 (the 20day is in this zone).
Amazon (AMZN) has been relatively weak and I do feel this macro bearish pattern can trigger to the downside. It needs to get below and stay below $175-176 and then $170 is huge. I’ve tried to short this with puts, and not done well there. Today I will see if the trade sets up.
Baidu (BIDU) got rejected at the major trend line. Now can it holds its recent uptrend. If it can’t get back above $135, I see a retest of the $128.50 area.
Netflix (NFLX) had an outside day on Feb 7th that still controls this stock to the downside. The $106-108 level is support. Below that I see $100-103.
Microsoft (MSFT) I sent out a message to take profits Friday. If you did so I would think $31-31.30 would be a good spot to buy back.
Intel (INTC) – the semi’s have lead us a bit lower in last week. This stock is trying to hold this upper floor. $26.07 is the 50day.
VMWare (VMW) is stalling a bit but shows relative strength. $98.17 is the 20day under that $95.
International Business Machines (IBM) has rewarded us recently and closed well yesterday. I got out, but if any stock can go green today, this is a candidate as it showed a ton of relative strength yesterday.
Google (GOOG) is trying to act better but the markets remains under pressure. It has support at $607 and then in that $600 zone.
Banks still hold up well and are going to be testing their 10day moving averages.
JP Morgan (JPM) I would like to add to my position between $39.22 and $38.60. Let’s see how this acts today in this downdraft.
Goldman Sachs (GS) had a nice break out last Thursday, I got stopped out of the remainder yesterday. The 10day is $117.06 and 20day is $116.08.
Morgan Stanley (MS) and Bank of America (BAC) have been showing relative weakness in last week’s last bout of strength. I got stopped out of MS yesterday.
Casinos had a great move last week that got extended.
Las Vegas Sands (LVS) triggered a nice buyable pattern last week around $54 and then gave a sell set up on Friday as it put in an outside day $57.20 was the pivot to sell longs or get short for cash flow. Since then it had a nice two day correction. Yesterday it held the 10day. I will look to buy some back in the $53.50-54 area for a trade. This is a candidate to go green today.
Wynn Resorts (WYNN) also had a nice buy set up last week that reached the sell zone of $130-$133. It closed on the lows yesterday. I will look to see if I can buy for a trade around $118-119.50.
Gold (GLD) is still working lower. It’s been controlled by the potent down day of last Wednesday. That $167.50 area proved to be the resistance. See how it acts at the reactionary low of $164. It’s a bit below this morning.
Stick to your plan, you create it for a reason.
Disclosures: Scott Redler is long SPY, OIH, JPM. Short DIA, QQQ.
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