T3 trader Rob Smith, who some of you know from the VTF, is holding a FREE trading conference in Chicago on May 13-14. If you're interested in joining him, please email customerservice@t3live.com and ask about the 'Rob Smith Chicago Event.'
By Scott Redler
We have mostly red arrows around the world this morning.
The yen is up another 1% while the Nikkei is closed for a holiday.
The Hang Seng is -1.5% while the Shanghai is -0.3%.
Europe is mostly lower with the DAX -0.8%, struggling to hold the 200 day. The CAC is -1.2%.
Our markets were a rollercoaster yesterday. SPX futures dropped 15 handles after the Bank of Japan didn't deliver more stimulus.
After two hours of trading, we had an oversold bounce and went flat, led by tech. So if you had longs on after the Fed, you had a chance to manage positions.
Then, tech rolled over mid-day as QQQ went red and then the SPX followed, intensifying by day's end before a bounce in the final minutes of trading. Uncle Carl's comments about selling all of his Apple (AAPL) didn't help sentiment.
SPX futures are flattish with Amazon (AMZN) up 12%. Use 2071 as key support. A break and close below this level could open the door to 2055 soon. Markets haven't been below the 21 day since 2/24, when we reclaimed 1920ish.
The market has felt vulnerable ever since NFLX, MSFT, IBM, AAPL, GOOGL, SBUX, and CMG (to name a few) created big holes in their charts post-earnings.
Energy, small caps, banks, and biotech helped prop things up, but I’m not sure how long that lasts. If we hold, SPX resistance is 2094ish, then 2103.
SPY has yesterday's pivot low at $206.97. Use that to base trades on. A break and close below could have $205.60 come up fast. $208.30 offers some resistance, then $209.40 is the next spot to watch.
QQQ tried to bounce but couldn't hold above the $107.75 pivot, so I sold without knowing how hard we'd come in. It's trying to hold the 200 day. A break and close below would not be good for sentiment. If it stays below for a few sessions, things get even worse. $106.07 is yesterday's low.
Oil is up a bit. I wouldn't buy it here, but doesn't mean it's an easy short as it could gravitate toward $50. USO has yesterday's high at $11.34. See if it can hold above it.
XLE has been a spot of relative strength. But it has come a long way and I won't buy it when it’s so far extended from the 8 day. Yesterday's low is $67.35, but $66.50 is better support.
Banks showed vulnerability and could break above the last upper support flag, so we sold them. It seems like a lot of active longs are out or have stops at XLF at $23.30. I listed upper level areas that needed to hold in GS, C, JPM, and MS earlier this week. Some are below, others are holding by a thread.
Biotechs were weak earlier in the week, but gave a nice red-to-green trade yesterday, then got rejected at $282 resistance $282. Be careful and look both ways before you trade. IBB has support at $272.40, which is yesterday's low.
If the market breaks 2071 with force, I doubt the small caps will hold up. So make sure to have high level stops. In IWM, mine would be $112.60ish.
The metals finally had a strong move to the upside. They built all day to maybe get it to leave this 2-3 month upper channel. GLD had a gap above $120 and gave some time to enter. It closed above $121 and now we’ll see if it takes out the $122.20 high. If this breakout is real, the measured move of this break should be north of $125.
GDX led the way hitting new 2016 highs and ABX and NEM, which I listed yesterday, did well. See if GDX can stay above $24.40 to keep momentum strong
Today’s Trading Focus
I exited most longs yesterday by selling strength and then salvaging weakness.
So GLD is only my long equity position. I already sold a third above $122.20, but I’ll try and hold the rest. If we hold above $122, this break out could lead to $125, and I have options on from last week that would capitalize on that.
I will see if I can trade FB around yesterday's low of $116.23.
Also, if AMZN fades off the open and SPY goes and stays below $207, I may short it.
