Futures have a positive tone providing small upside follow through to Friday’s reversal. Last week, the S&P failed to break out on Tuesday, producing about a 28 handle correction thereafter. Friday’s positive stock action will give markets another attempt as individual stock patterns continue to build.
S&P micro support stands at 1406-1408, then you have Fridays low of 1398 as the new pivot low.
S&P micro resistance stands at 1416-1418, then you have recent pivot high of 1422-1426.
As we approach the last week before Labor Day all eyes will be on Big Ben and then Europe. I won’t get into it today, as we have a few sessions to focus on stocks vs. manufactured headlines.
Everyone always asks me why I focus some much on Apple (AAPL). I ask them, why don’t you? The stock rewards market participants on every time frame. Macro Investors, Intermediate trend watchers, and Cash flow intraday traders. You name it. The stock trades very consistent with chart patterns and when it triggers at key levels, you can actually get paid with follow-through. At this point only you’ve read all the info from that court case in which they had a sweeping victory. In order for it to see momentum today after this 17 pop, stock must hold above $675 in the first 30 minutes and close above it. The stock can see $700+ pre labor day.
Amazon (AMZN) is also acting well as it keeps holding higher and pushes up when it wants to.
Google (GOOG) will be in some focus as people think that the AAPL victory can pressure this stock. I don’t think so, but I will watch the action. Stocks have been acting very well. The $660-$665 level is important support to hold to keep high level bullish composure intact. Then above $680.50 it canl get some momentum.
Priceline (PCLN) got hammered after earnings, but since then has created some opportunity. There is another pattern to watch above $600 and you can see a cute 10-20 point long trade.
Baidu (BIDU) got crushed. As most momentum guys used $128 as stop on 8/21. Thursday it could have “capitulated”. Just scalp it vs. recent lows of $110-$111. I don’t have much interest here.
Salesforce (CRM) was down a lot after earnings but the Street bid it up after as it was given a pass. See if this can start acting better.
VMWare (VMW) had a small Reddog Reversal around $94.51.
LinkedIn (LNKD) continues to build a level above the earnings gap. They try and pound this stock since the group has been gross, but it’s trying to separate from the pack. As long as it stays above $104, some intermediate guys will stay with. It needs to get above and close above $107 for a cash flow momentum trade.
Homebuilders continue to lead (XHB).
Banks still try and hang around—they only reward you if you buy the dip. Rarely can you buy strength.
Casinos gave us a lot of opportunity in August as they finally bottomed.
Retail still gives stock pickers action—Target (TGT), Costco (COST) and Home Depot (HD) still look good. Wal-Mart (WMT) needs time.
Consumer Staples (XLY) also continue to build higher.
Metals woke up last week. This was a nice surprise for those waiting to pounce on the technical action. The potency of last week’s move should lead to higher prices again this week—use a tier system to trade around the new patterns that develop. We will measure the speed of the rally.
Silver (SLV) triggered at $27.45 and ignited to almost $30. Now holding $29.46 would be impressive; a few days of rest would be good.
Gold (GLD) triggered above $157-$158.50 and peaked at $161.41. Holding $161 would be impressive.
Macro guys say these can continue 30%-50% higher from the tactical entries. So trying to be too cute instead of just holding can cost you some money and raise some frustration. Know where you stand on these. I held for four days. I will try and figure out a spot to re-enter.
Traders were pleasantly surprised by the action in August. There is a lot to like in the Equity Markets for those that use a calculated approach.
Disclosure: Scott Redler is long AAPL
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