By: Scott Redler
Goldman Sachs (GS) went red after reporting earnings and then the market collapsed through the uptrend line we’ve been honing in on for the past few sessions. Now that the uptrend line has been broken, the market’s complexion has officially changed in my mind. There were many technical signs leading up to yesterday’s move that such a decline was in the cards that we have consistently been covering on this blog. As of now, hopefully you already have cleaned up your positions and even made some money short in the decline.
The S&P is now testing its 50-day moving average (approximately 1,113), which makes sense considering the market’s leaders broke through theirs. 1,110 is the 61.2% retracement of the move off of the early January highs.
As for today, I already bought some Google (GOOG) at around $557 and think it can bounce back to at least $570-573. I will watch Goldman Sachs (GS), which is down about a dollar, to see if I can play some type of bounce. The banks technically look like they are headed lower in the longer term. As long as GS stays under $164-165 over the next few sessions, there is a good chance it can work its way down to $130-135 over the next month or so.
Rino (RINO) is up $2.50 this morning–I lost a lot trying to buy it for a bounce yesterday on its 7th down day in a row. Figures the move happens preopen without me.
If you missed the shorting opportunity, there usually is a retest of a trendline after the break. If we can get a bounce back to the 1,128-1,132 area, that will be your chance to lighten up on longs and to enter some short positions.
Have a great weekend!
