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Scott Redler All-Access Morning Note
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By Scott Redler
We have mixed markets around the world with a lethargic, profit-taking feel.
In Europe, just after the DAX went positive on the year, it's having its second day of downside, off -0.7%. But it’s not potent.
In Asia, the Nikkei is bouncing 0.9%. The Shanghai is flattish, and the Hang Seng is -0.4%.
These aren’t real warning signs, just slight pullbacks in existing trends during these mid-summer doldrums
SPX futures are flattish after losing the 8 day yesterday. That’s not a sign for concern but the tape does feel a bit tired as most big participants head for vacation and earnings season comes closer to an end.
We have the Fed Minutes today and now it seems like September is "live" as an option.
Yesterday's SPX low is 2178. If we trade below it, there is a cluster at 2167-2172 where the markets did some work. That should hold at first touch. Major support is 2155.
Resistance is 2186 then, 2193.
SPY has yesterday's low at $217.96. See if we hold above or do a bit more probing. The next area under that is $217.20-$217.60. Resistance is $218.68, then $219.50.
Each week, there is a sector that is best to focus on.
A few weeks back, the BIOs were the place to be as the IBB ran from $273 to almost $300. It's in consolidation mode now and we'll see if it can do work above $288 to see a move back north of $300 in the Fall.
Last week, oil was the place to be as it fell below $40 and we focused on finding Red Dog Reversal bottoms in USO, UWTI, and XLE. Each had a strong move and could use a bit of a rest, as I stated yesterday. Oil went from sub-$40 back to above $46.
USO has some upper support at $10.70.
UWTI has upper support at $23.99.
XLE, which has seen some better flows, has upper support at $68.71. It looks to be breaking above monthly highs if it can clear $69.60 with some force.
The banks started the week strong and showed relative strength yesterday. Most cleared weekly pivots as I listed some important upper support areas to hold.
Now we'll see if they continue as the rates talk for September is louder. There are not many "tight patterns."
See if XLF stays above $23.90.
MS had news of an activist stake and it helped lead yesterday. Make sure it holds $29.86 to stay in here.
GS played some catch-up. It needs to hold $163.60 to keep some interest.
BAC is tight and needs to clear $15.20. It could see $16 in the Fall.
JPM didn't lead yesterday. See if it can hold $64.86 to stay constructive.
Small caps had some profit-taking yesterday. IWM has yesterday's low at $122.26 to use as your pivot. Bigger support is $121.60.
It's a very stock specific-strategic trade now as not all names are in play.
AMZN had two down days and has been pretty lethargic. Yesterday's low is $763.82. It lost the 8 day. If it trades under that pivot, the next real support is closer to $755 (21 day)
GOOGL has been just sitting with no interest as it absorbs a big earnings move. It broke $803.50 and hit $797. Use that as today's pivot but don't overtrade it. There is really no attention here. Next support under is $785 (21 day).
NFLX couldn't clear the downtrend that still contains it. There’s not much to do here unless it takes out $97 on some type of news and volume. Support is $93.40.
TSLA has lost some interest and momentum. Some are trying to short it for a move below $223 to see at least the 50 day at $220, and under that is $217.
BABA had a great post-earnings move. Some bought the dip as it held $95.05. See if that is new upper support to buy against. With time it could get above $97.15 on its way north of $100. The question is, how long does it need to digest?
BIDU played a little catch-up Monday as it cleared $169 and held it yesterday. If that area continues to hold, there could be another trade above $175 to see the 200 day around $177.34.
Social names:
FB has been out of play since they sold it on earnings. Recently, it broke below the 8 day and it’s trying to hold the 21 day. See if it can hold $122.78 to start building a better pattern when interest comes back. $123.92 is yesterday's high.
TWTR had a big post-earnings move from $16.85 to $21.10. It needs to digest and re-build. Yesterday's low is $20.29. The 8 day is all the way at $19.34. Let it do a bit more probing to build upper-level support.
Mega caps:
AAPL had a big post-earnings move from $102.75 all the way to $110.23. It looks like it needs a rest. I created call spreads for all the options I bought over the last two weeks. Now it could range out. The 8 day is $108.40ish. I would look to buy some back there if it sees it.
MSFT lost the 8day and upper support. Next spot to see if it holds is $56.70ish.
IBM lost some momentum and the 8/21 day. $160 is next support.
New issues:
ACIA got stretched on Monday after a massive move. It’s trying to consolidate. It held well yesterday. $97.02 is new upper support to trade against.
TWLO had a big move and it could use some time. See if it can hold $55 to rebuild as it could use some time to digest.
LN has started to act much better. It cleared its post-IPO high of $44.49. If that holds, it has room to keep going. To see a move towards $50, the next spot to clear is $48.10.
TLND had a huge Monday move and can use a bit of time. See if it can hold above $28 to rebuild.
PI is on the move and on our radar. It needs to hold $20.32 to stay constructive for momentum.
Metals are still a bit erratic from day to day. GLD couldn't clear $129.20 and is off a little this morning. There's another wedge-type triangle building. $127ish is key support.
GDX is having a hard time making traction into new highs. $30.64 is yesterday's pivot low. $30.12 is the 21 day.
NUGT: $160.50 is yesterday's low. Under that is $154.50
Since earnings season is winding down, here is a list of some important dates to watch:
1) Minutes from the 7/26-27 FOMC meeting out Wed 8/17
2) Flash manufacturing PMIs for Aug out Tues 8/23
3) Jackson Hole 8/25-27 (Yellen speaks 8/26)
4) US Aug jobs report Fri 9/2
5) G20 Leaders Summit Sept 4-5
6) ECB meeting 9/8
7) BOJ meeting 9/21(at which Kuroda has promised to complete a comprehensive assessment of BOJ policy)
8) FOMC decision/Yellen press conf. 9/21
9) first US presidential debate 9/26
10) oil – Int’l Energy Forum takes place Sept 26-28 (there is some talk about an int’l production freeze deal being discussed around this event)
11) DBRS review of Portugal’s credit rating
Source: JP Morgan
Today’s Trading Focus:
It feels like markets can go below yesterday's lows, but I’m not sure by how much. I would like to buy SPY at $217.50ish for a trade. I nibbled some BABA on the dip and will continue as I think it takes out $100+ at some point. AAPL needs to rest. I’m only really interested if it sees a move towards $108.50. I will watch new issues that need time. I think LN might try for $50 if it can clear $48. I have GWPH calls and will look to add if it sees $75ish.
Remember, it's mid-August and the market can be thin and quiet, and we’ve had a big move since June lows.
Positions Disclosure: Scott J Redler is long BABA, LN, BAC, NERV, CRK, AAPL call spreads, WYNN calls, TWTR calls, GWPH calls, GILD calls
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Today's Trading Calendar
US Economics (Time Zone: EDT)
07:00 MBA Mortgage Applications (8/12): prior 7.10%
10:30 DOE U.S. Crude Oil Inventories (8/12): exp. 950k, prior 1055k
10:30 DOE Cushing OK Crude Inventory (8/12): exp. 500k, prior 1163k
10:30 DOE U.S. Gasoline Inventories (8/12): exp. -1700k, prior -2807k
10:30 DOE U.S. Distillate Inventory (8/12): exp. -600k, prior -1959k
10:30 DOE U.S. Refinery Utilization (8/12): exp. -0.60%, prior -1.10%
10:30 DOE Crude Oil Implied Demand (8/12): prior 16698
10:30 DOE Gasoline Implied Demand (8/12): prior 10223.3
10:30 DOE Distillate Implied Demand (8/12): prior 5202.9
13:00 U.S. Fed President James Bullard Speaks in St. Louis
14:00 U.S. Fed Releases Minutes from July 26-27 FOMC Meeting
14:00 FOMC Meeting Minutes (7/27)
Global Economics
04:30 GBP Average Earnings Index
04:30 GBP Claimant Count Change
21:30 AUD Unemployment Rate
Earnings
Before Open:
American Eagle Outfitters (AEO)
JA Solar Holdings (JASO)
After Close:
Cisco Systems (CSCO)
L Brands (LB)
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