First Market Distribution Day

By: Scott Redler

During the past few sessions, we have seen some discouraging action. Some big cap tech names traded through their 50-day moving averages and Goldman Sachs (GS) sliced through its 50-day. Although the market’s uptrend remains intact, prudent traders were cleaning up their positions in the past few days.

The big story this morning is Google (GOOG) pulling out of China. Does GOOG really think it can negotiate with the Chinese government? Only time will tell. The stock will be opening down below its 50-day moving average. $580 is some type of support. Considering its oversold status, GOOG is worth a long against the first 15 minute low–BUT, do not get stubborn! Trade against your levels and take your out if that’s how it goes.

On the flip side, Baidu (BIDU) is opening up through that $444 level after closing yesterday on its lows, with volume. Lots of shorts were trapped overnight. Use the correct intraday strategies as well.

BE VERY CAREFUL–EXPECT THE UNEXPECTED.

The Rundown:

The banks got hit a bit yesterday–Goldman Sachs (GS) could be an 80-20 reversal for a scalp long trade if it moves through yesterday’s low and can’t hold down there.

The OIH was a nice two day short, as was oil. Technically, they could use some time to rest, but with the oil number coming out today there might be a catalyst for another move.

Gold had a potent down move yesterday and has created what is potentially its first “lower high”–we are still in tier one, but I would avoid it or use the 80-20 strategy with yesterday’s low.

The casinos were very strong yesterday, especially MGM (MGM). Wynn Resorts (WYNN) and Las Vegas Sands (LVS) both held up relatively well in the sell off yesterday.

I would use a bit of caution moving forward, as the market is under some pressure. Be much more selective when you choose what to trade. A lot of these moves are very stock-specific right now, and being in the right place is the first step to maneuvering through this market.