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Not Much Interest In Buying Dip Ahead of Fed Minutes

August 21st, 2013

morningcallScott Redler: World Markets are mixed this morning and S&P futures are down 4-5 handles as there doesn’t seem to be much interest in buying this dip yet. The August corrective action, although there are a group of stocks continuing to provide relative strength.

Yesterday, our markets tried to muster a bounce but it was very feeble and unimpressive. The question now is whether we can hold Monday’s low, or whether we could test deeper support levels. The S&P 1645ish level is the spot to navigate if you are actively approaching this area. A break and close below that level & the next important one to watch would be 1633ish, which is where the 100-day currently stands. If that spot holds, perhaps some pressure could come off the markets with a close above 1658ish. During corrective phases I believe you should be more measured with your risk and involvement..

Fed minutes come out this afternoon and continue to be an obsession of the market. What’s good about all the “Taper Talk” is that it has gone ahead and raised rates without the Fed having to do anything. Rates have gone up and the market, which was up a scintillating 20% for the year, has cooled off a bit. I think that is healthy. The question now is, has the taper been completely priced in?


I do think at the last Fed meeting, the markets were a bit stronger here and around the World, so the minutes could be leaning toward a September taper. If it was a “new meeting” today, perhaps the tone would be a little different. Either way, it should be interesting. Use the pivot we discussed for adjustments regardless, which for the SPY is $164.76-$164.87.

In the Morning call we will re-visit the banks, many of which had nice tradable Red Dog Reversals yesterday. If we were to hold in today, these should stay above yesterday’s lows, so there could be an opportunity in this group during this soft open.

Select Sector Financial Slct Str SPDR Fd(NYSEARCA:XLF) has been stuck in a down trend since August 5th and broke below its 50-day last week. Yesterday it had a Red Dog Reversal at $19.75 that gave us a nice calculated set-up for cash flow, with a stop at low of the day of $19.72. The ETF had decent gains of 0.96%. The next obstacle is the 50-day, which stands at $20.08. A break and close above this could help the ETF to regain some power. See if this can create a “higher low” today or if yesterday was just a  one-day trade.

Goldman Sachs Group Inc(NYSE:GS) saw a nice snap back yesterday after four days down and also gave us a calculated Red Dog Reversal signal at Monday’s low of $158.53. It has some resistance from the 50-day at $160.42 after breaking below it Monday. Reclaiming this key moving average could help the stock to regain some upside momentum.  See if it holds above yesterday’s low.

Bank of America Corp(NYSE:BAC) held its prior pivot high of $13.99 and had a nice bounce back to

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NYSE:GLD, NYSE:TBT, NYSE:XLF


 

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