Some headlines of Bold Action in Europe, and a bit of a compromise in Washington, are helping the futures and the markets this morning. This up open is nice follow through for those who went out long, based on yesterday’s strength. Some nice follow through to all those 80-20 Red Dog Reversals that we saw in many sectors across the board. Yesterday we outlined micro strategies to be long for “cash flow” and sometimes you can walk in pleasantly surprised if you follow the right set of rules. I understand the “macro” issues, I understand all the “bearish” arguments. But as short term traders you need to pay attention to the action and the patterns.
$SPX is up 12-15 handles and closed right around key resistance yesterday. Today it’s opening right where the 10 and 20day moving averages are converging around 1178-1183. This will be a spot that I will sell some longs from yesterday. This is a spot worth trying a bit of a short. BUT DON’T GET STUBBORN. Most stubborn traders rolled their shorts up from yesterday and are in a predicament this morning. It should create a bit of volatility.
Next spot – 1188-1192 and then 1206.
AAPL- started out weak with tons of back and forth headlines but closed strong. It’s held it’s 21day still showing nice relative strength. If you are long an extra tier from yesterday, I would sell some in the $407-409 area. But this remains a macro tier one long.
AMZN- super strong stock that held its 21 day and the levels we defined in the charts and has some easy room back to $232-235. Same strategy to sell some extra shares into this spot. But still a macro long candidate.
BIDU- is broken but put a small double bottom in $115 area and might be worth a long for the active trader.
SINA- similar to bidu, got crushed and stops were triggered, but has some room to bounce. Very tricky.
NFLX- Very frustrating stock. I’ve tried to buy a few times in the $130 area but doesn’t have follow thru- I guess if you’re trying this level for active longs. Don’t overtrade and if it can get above 137 -138 and hold for 60minutes. Maybe it sees $150sih. Use 125 as the stop.
VMW—Cloud stocks have been weak and this is acting better than some of them. If you played this for a bounce yesterday, it will have a ton of resistance in the $89-91 area. I would sell it there.
The best stocks to trade yesterday into today were the BEATEN DOWN, WORST GROUPS of the last few months.
OIH- Great Red Dog Reversal from yesterday. The buy price was 108.30ish. Lots of stocks in this group had the same pattern. HAL, SLB, NOV etc. They are all opening in the gap from 9/21 . it’s up to you now, where to take profits and how to trail . I will sell most of my OIH on the open.
MOO- same type of pattern. Beaten down group that gave a short term buy signal yesterday. Most stock in the group look the same MOS, POT, CF, etc. I would sell some on the open, and trial some.
XLF- started it’s rally on Friday and now on day three. If you bought Friday, I would sell some on this open as $12.25-$12.50 would some resistance.
FCX- I’ve been targeting this for a an oversold bounce since Friday- yesterday it got frisky. I’m going to sell some on the open, it has room to about $38 tops.
If you didn’t cover your shorts yesterday in Gold and Silver you need to read the book about Pigs getting slaughtered. My mantra is always to take the meat and Potatoes of the move and save the slippery juice for the next guy. (sometimes I do sell or cover way too early).
Yesterday we talked midday about covering shorts in both metals. They had a huge move lower with some capitulation type action. Even if they are to go lower, it was a prudent spot to take it off.
GLD- some flipped long in gold (GLD) with the reversal pattern not expecting such a big move this morning. But “The Good Book” said to take some long, and if you listen to the good book, the high percentage strategies will surprise you to the upside. $162-$164 is a spot to take some off. $165.72 will be massive resistance.
SLV – actually had the strongest reversal yesterday- and is up almost 10% this morning. If you covered and went long yesterday- I would sell most on the open.
I know this action can be tough, but you can’t bring in your opinions on a daily basis. This is the last week of the QTR. This is the last week of the year for most “buy only” mutual funds. So there was a decent chance that the fix would be in. I got caught short in Qtr. 2 and fought as a short and had my worst week of the year. Right play, bad timing. Learn from mistakes.
*Disclosure: Scott J. Redler is long OIH GLD FCX CAT AAPL
