report on CNBC last night cited a source close to President Obama saying Larry Summers could be named the next Fed Chairman within the next few weeks (he is more hawkish than the other candidate, Janet Yellen), and many are not also casting an eye toward the next debt ceiling debate, which could become an issue as early as October.
While you have to be in tune with the headlines, I like to let the market do the talking. The first shot across the bow for some “risk off” was August 8th when we broke back below S&P 1698ish (SPY $169.85). The next warning sign was when the Bears defended that level for multiple sessions. The next key day was August 15th when the Head and Shoulders Pattern triggered to the downside as the SPX sliced 1676-1682 (SPY $168.40ish). This move led the markets down to a pivot low at 1639 (SPY $164.19). Then markets became oversold enough for us to play a tactical bounce that lead to a mid-range reversal yesterday (RDR).
The S&P was working on its third bounce day and traded up through 1664 (SPY $166.83), squeezed a bit higher to 1669 (SPY $167.30), and then failed at resistance (also gap resistance). Active/intermediate market participants who know what the “Red Dog Reversal” is were able to reduce risk again as we traded back below SPX 1664 (SPY $166.83). Those looking for a short signal were able to lay some out there.
Today S&P futures are down 10-12 handles. We have some support at 1645 then 1639. The 100-day now stands at 1636 with a very big level around 1620-1626. I do think this area needs to hold for hopes of new 2013 highs. The 200-day is all the way down at 1557ish, which lines up with the lows from June 24th. No one truly knows where the markets will go, but if you are in the right position you can measure levels along the way and embrace the volatility.
In today’s Morning Call we will talk some levels in the “go-to names” that all had nice moves but look a little extended.
Netflix, Inc.(NASDAQ:NFLX) had nice upside follow-through yesterday after it triggered our action area long price of $274 on Friday. The stock gave us a nice two-day move before seeing some selling with the pull back in the market. Short term support stands at Friday’s high of $278.40, and below that we have yesterday’s low of $274 as the next key short-term support.
Apple Inc.(NASDAQ:AAPL) had some nice action yesterday after consolidating for several sessions to allow 8-day MA to catch up. It triggered our action area long price of $503.35 to extend to $510.20 but it couldn’t hold that action area into the close. AAPL has a product event on September 10th when the company is expected to unveil the newest iteration of its iPhone. The upper support is sitting at $498-500 area, and below this is $489-492.
LinkedIn Corp(NYSE:LNKD) has continued to extend higher since August 16th when it retested the 21-day and held. Yesterday it triggered our Price Point Sheet action area long price of $240.88 to put in new highs at $247.98, but the market’s harsh sell off in the afternoon dragged the stock down to close on lows. Short-term support is standing at $235.
Facebook Inc(NASDAQ:FB) held the $36 level on the recent pull-back, then saw an impressive extension last two sessions. It put in a new 52-week high at $41.94 before seeing some profit taking. FB now looks a bit extended from the short-term moving averages and some rest would be healthy.
Tesla Motors Inc(NASDAQ:TSLA) got an impressive gap and go in the morning yesterday but faded sharply. Yesterday’s big tail sends out some signals to take caution, as it could get some downside action below $160.25 today. The 8-day is $153.86ish.
Google Inc(NASDAQ:GOOG) is acting weak and could be vulnerable. The recent pivot low is $856, and if it breaks below this it could be in some trouble.
Amazon.com, Inc.(NASDAQ:AMZN) is also not acting so well since the false breakout on earnings. It saw a very potent down day yesterday, and a break below recent pivot low can $283.50 could trigger a move to $278ish.
Wynn Resorts, Limited(NASDAQ:WYNN) had a nice move through $141 up to $146 but pulled in pretty hard. It could use some time. LVS and MGM also act well but will need some time if the markets continue to get pressured.
Metals continue to move well as they extend higher.
SPDR Gold Trust (ETF)(NYSEARCA:GLD) continues to reward traders that have been following the recent trend off the June 28th lows. Today gold is up $18-20 on the Syria anxiety. GLD has some resistance $137.50-139.50.
iShares Silver Trust (ETF)(NYSEARCA:SLV) has enjoyed a really nice move as well. The $17.75-18.25 level proved to be a better buy than a sell as we stated numerous times. Now it’s in the April 15th gap that gets closed up at $25ish. Now I think it’s a better sell up to $25 rather than an ETF where I would look to initiate new longs.
Oil – via United States Oil Fund LP (ETF)(NYSEARCA:USO) has been consolidating for almost three months. The $38.50-38.65 range is a big resistance pivot to look at, and close above this could trigger higher prices. The Syria situation could be a big catalyst for higher oil prices.
The ProShares UltraShort 20+ Year Trea (ETF)(NYSEARCA:TBT) is coming into the 21-day as rates pull off a bit. It will be interesting to see if this moving average that hasn’t been broken for more than two sessions since Early May remains key support.. If not, the 50-day is $75.77. It’s pretty typical that last week the mainstream media started trumpeting 3% yields right before the pull-back.
You can make adjustments with a tactical plan – you didn’t need to be a political analyst that specializes in Syria in order to recognize yesterday’s Red Dog Reversal that signaled to take down risk or get short. I came in yesterday with seven longs and pared that down to one based on the weak close.
Scott Redler has been trading equities for more than 10 years and has more recently received widespread recognition from the financial community for his insightful, pragmatic approach. He began his career as a broker and venture capitalist where he was able to facilitate relationships that led him into trading. Beginning his trading career at Broadway Trading in 1999, Scott moved on with Marc Sperling to Sperling Enterprises, LLC after establishing himself as one of the best young traders in the firm. As a manager at Sperling Enterprises, he maintained his status as a top trader in the industry while working closely with all traders in the firm to dramatically increase performance. Scott has participated in more than 30 triathlons and one IronMan triathlon, exhibiting a work ethic that also defines his trading. His vast knowledge and meticulous attention to detail has led to regular appearances on CNBC, Fox Business and Bloomberg, and he has been quoted in the Wall Street Journal and Invest.
Scott is currently the Chief Strategic Officer of T3 Live and is a Registered Associated Person of T3 Trading Group, LLC.
*DISCLOSURES: Scott J. Redler is long BAC