US stock futures point to a higher open Thursday, entering the third day of what has been an impressive oversold bounce. THe ECB really didn’t make any substantial moves yesterday as it seems they want the Euro Zone Governments to make some choices, but stock surged in spite of the inaction. It seems the ECB is trying to force the hands at the Eurozone Summit that doesn’t take place untill late June! Fed Governor Janet Yellen, who tends to share similar views with Bernanke, laid out a case for further stimulus. Bernanke himself is scheduled to testify on the outlook for the economy in Congress today, where we should start seeing some headlines around 10:00am ET.
Most market participants are asking if this move off the recent lows can be trusted. Is this rally “real”? At this point if you rolled up shorts starting Monday you are probably sweating a bit, and if you took some longs on Tuesday as we reclaimed the 200day moving average, taking some profits in this area after a 50 handle move off the lows is prudent.
Typically you Judge the first “wave” off the lows by the commitment to it in the next 3-5 sessions. Tactically I will look to short SPY into strength today. SPY next resistance stands at $133.10-133.40 (a spot that I feel will be better to short vs. buy the first time we see it). Next Major Resistance is $134.20-134.70 (this is the Major, Major spot). Shorts will be on the ropes if we see this today.
First support in Spy is $131-131.40—if we hold above this spot next few sessions bulls could get a bit more confident. Bigger support is where the gap starts at $129.93 (this zone will have to be defended by the bulls in order to keep any shorts trapped or pent up upside momentum).
Commodities snapped back a bit but lacked some power, which makes me think Bernanke might not be so adamant about more QE today. Metals failed at important resistance areas yesterday.
Gold (GLD) tried to break the intermediate downtrend yesterday around $159 and failed. Some got stopped out during yesterday’s gap fill. More committed longs should look at $156.12 to trade against, then Friday’s gap from $154.87.
Silver (SLV) also gapped up and didn’t have follow through. The $28.39 level should be your pivot.
High beta tech is still a mixed bag. If we see some key stocks start acting better perhaps it could breed more confidence.
Apple (AAPL) still acts very well and held higher. It’s building an inverted Head and Shoulders Pattern. The $580-$581.50 zone is next resistance level to deal with.
Amazon (AMZN) woke up Monday and acts better.
Google (GOOG) is still on the weak side and has some room but is not compelling. $586-588 is resistanc, then the 200day at $595.
Baidu (BIDU) is bouncing off the lows but needs time.
Facebook (FB) reversed yesterday with my tactical reversal pattern. $25.75 was that previous low and RedDog reversal pivot. Above $27.20ish and perhaps it can get a two days in row. We haven’t seen this since it’s been public. Some other related stocks are trying for a small bounce like Zynga (ZNGA) and GSV Capital (GSVC).
Banks are now on Day 3 of the bounce, a spot to take some profits if you’re in for the short term. Could be tricky to fade since they came down so much, but worth a look today.
JP Morgan (JPM) was a nice tactical buy as it was a “sell the rumor, buy the news” event off lows around $31. Now it heads into some resistance at $33.40-33.70, then $34.60.
Goldman Sachs (GS) is also on day three of its bounce. The $97-99 level is probably a better sell than buy first time.
Casinos bounced has a bounce off the lows, but didn’t have much power yesterday. Las Vegas Sands (LVS) had $47.02 as yesterday’s high, the next spot is $47.72-48.84.
Wynn Resorts (WYNN) yesterdays high is $104.69- next spot is $106.13.
Retail has been a bright spot: Under Armor (UA), Wal-Mart (WMT) and Target (TGT) have been strong. We don’t take stocks into earnings and Lululemon (LULU) is the latest example of why. The stock is down 8 points. see how it handles 200day at $61.03, then the major gap around $58.50
Oil names are snapping back, but this group in my opinion is just an oversold bounce type play so take care.
Know your time frame, and no one should have “major opinions” right here! Let the market decide.
Disclosure: Scott Redler is long FB, ZNGA, GSVC. Short SPY (average cost around $132.75ish. I will look to add if we see $134ish today. At that point I will be a bit uncomfortable).