Equities Had Every Reason to Rally…But Didn’t!

By: Scott Redler  

Yesterday the market had every excuse to go up…but we didn’t!

S&P’s tested 1040-1042 and reversed lower marking the “classic retest”. The new micro floor is 1010-1018. If this level breaks we have a “psychological” level of 1000 but the next real support is 980-985 then 960 way below.

I see a lot of bear flags and lower level consolidations after a move to the downside. Usually this leads to lower prices. If you see no bounce after a decline, typically that shows real weakness.

I will attach two examples of a bear flag and then you will look across the market and see a ton of them.

NASDAQ:AAPL had a false break out above 270 and our last short entry was 269. Now watch 243-246. If stock were to break and close below this level. We should see a move to 235-237.50 pretty quickly.

NASDAQ:BIDU – The last time we listed it as a short was when the uptrend broke around 72-73. Stock has not had any interest in this lower level. My short entry would be 66-66.50 for a quick move to 63 and then bigger support around 60.

NYSE:SHLD has been absolutely CRUSHED. I will see if we can get some type of Red Dog reversal. That would have if stock breaks 59.51 puts a morning low in, and comes back up thru and then use morning low as a stop. That is the ONLY WAY I will get involved. Guys have been getting crushed trying to accumulate for a bottom here.

NYSE:GLD was a great sale for us at 199.77. I will look to see if it is buyable for a scalp in the 115-115.50 area or if it does the 80-20 thru 116.30.

The one caveat for the bulls is if you look at the head and shoulder formation of May to July in 2009 right before M. Whitney upgraded the banks, we were hovering below the 880 neckline then the pattern broke to the upside. For me that would be if we trade back above 1040-1042.

Watch the action close, and don’t get stubborn either way.