It seems like all the kings horses and all the kings men keep putting this rally back together again when the market seems in jeopardy. Yesterday the gap down hurt longs, but the market provided a way out with the early bounce. Several stocks we list often traded great, like Baidu.com, Inc. (Nasdaq:BIDU), Netflix, Inc. (Nasdaq:NFLX), Apple Inc. (Nasdaq:AAPL) and VMWare, Inc. (NYSE:VMW) to name a few. Early this session we are seeing more strength from BIDU as well. This morning, we were down huge overnight before paring some of those losses in to the open this morning. Can we get the correction at some point in the next week?
Earlier this week I stated that a healthy pull in to 1197-1202 would make sense. We’ve been holding 1204, but I would take less size and be more nimble at this stage. China is down 5% and rumblings out of Europe are negative, with Ireland again are putting pressure on the futures again. Overnight it was much worse, the S&P was down 20 handles at one point, but that was before the POMO-beneficiaries perhaps woke up and maybe started buying futures. POMO operations are scheduled for every day until December 10.
I’m going to play it safe as I feel like we are losing our edge a bit as traders into this choppy area. This is a spot where less is more. Despite charts remaining still intact, it’s getting harder to trust without firm areas of reference.
*Disclosure (subject to change): Long VMW
