Bears had their chance yesterday to press the markets to the downside and didn’t have much power. Tuesday we had a Bearish outside day that should have brought out more sellers. Markets started lower and then drifted a bit as some of the usual suspects started to show strength to lead the comeback. The 2pm ET Fed minutes accelerated gains into the close. Whether or not the Fed actually announces a new bond buying program at Jackson Hole remains to be seen, but language remains the Fed’s most effective policy tool.
Despite the low volume market, there is still tradable volatility in stocks, a surprise for the Dog Days of Summer. In our Active Trading Course and Mentoring, we teach to trade lighter size during Summer trading, but it’s hard when you have this type of movement! It’s like the “Godfather Market”; every time I try to take off positions, pare down size, or try to be prudent, the market action “pulls me back in!”
Futures are starting to turn South as the morning wears on, though, and we are now set for slightly lower open.
This is now Day 4 of this Commodity move. On Monday, we outlined the breakout in Silver (SLV), but given its recent fickle nature, I wasn’t sure if it was “real”. The “Good Book” said to go long Gold (GLD) and SLV based on the action. Since then both Gold and Silver made it very easy to hold this week as neither pulled in much at all.
Today, I’m sure it will be all over TV as everyone will get excited. GLD is gapping up almost another 1%, and SLV another 2%. This is when traders trim or hedge their positions a little bit. If you didn’t buy GLD at $157ish or $158.50, you have no business entering/initiating a new position here above $161 this morning (even if it goes higher). Same goes for SLV; the right entry was $27.45-$27.55, or even around $28.60, but this morning above $29.50 you might have to hold off.
High beta tech lead the way yesterday. Apple (AAPL) couldn’t stay down for long ahead of the iPhone 5 announcement. Amazon (AMZN) has reclaimed its position as a tech leader. Google (GOOG) is still acting well and on the move. Each of these stocks is giving opportunity at select times based on your time frame.
In corporate news, Hewlett-Packard (HPQ) is down more than 5% pre-market after the computer maker posted its biggest ever quarterly loss. Analysts at Deutsche Bank reiterated their sell rating on the stock with a price target of $15, down from $20, adding to the bearish tilt.
Best Buy (BBY) is continuing its comeback from dismal earnings this quarter, and is up 3.2% this morning following a Bloomberg report that the electronics retailer has restarted talks with founder Richard Shulze about taking the company private with a buyout. Back on August 9, Schulze proposed to take the company private for $9.5 billion, but was rejected. BBY’s current market cap, as of Wednesday’s close, was $6.9 billion.
Disclosure: Scott Redler is long AAPL, LNKD, BIDU, GLD, SLV. Short SPY.