By: Scott Redler
…AA is the Headline Blame–I see Otherwise
Yesterday’s action was pretty telling that the market was somewhat tired. Big cap tech bounced on Friday, but was sold off right at the open yesterday. Amazon (AMZN), Google (GOOG), Apple (AAPL), etc. all fell quickly. Early on, Goldman Sachs (GS) broke the bottom of its 4-day range at $174. On the whole, these signs urged me to pare down some long positions and take some risk off the table.
The Rundown:
- The Oil Service HOLDRs (OIH) now has a topping tail– a sign of a rest. I shorted the open yesterday at around $133 and that trade worked well. It should get to $127-128ish for a cover.
- Oil needs to consolidate up here and rest for a little.
- The casinos were strong yesterday–I guess news leaked early that GS would be upgrading MGM this morning. Most big players are long from $9ish and sold $11 and $12 calls already.
- AAPL $208 is a very important level. If it does not hold, we can get a quick short and easily see $205.50-206.
- GOOG–trying to hold the low $590s as the 50-day moves up (the 50-day stands at $585 right now).
- AMZN remains weak and that $129 area now looks vulnerable.
- Little stocks continue to move around–RINO wasn’t quite ready yesterday, but keep watching it.
- Support on the S&P is the 1,130-1,132 area, then we will be looking at 1,126-1,127 as the line in the sand.
Today my focus will be on Goldman Sachs (GS). It is very close to its 50-day moving average. How GS handles the 50-day, at approximately $169.80, will be a crucial tell for the market.
There are three scenarios to watch for in GS:
1. It holds above the 50-day, without ever touching it and goes positive. At that point, we buy for a scalp long back to the $173/174 area with a stop at today’s intraday low.
2. It touches the 50-day and holds, then you can buy for a quick long as well, back to the $173-174 area.
3. It slices through the 50-day, shows bigtime weakness and does not stop. In this scenario, that would mean that the market can be in a lot of trouble along with the financials.
The Bonus Strategy–GS slices through it’s 50-day, triggers all the stops sitting below and everyone gets sold out. Then later in the day, it reclaims that zone and you can trade it from there.
