By: Scott Redler
From Late April-Early May, we began pointing out a potential top on a series of CNBC appearances. Once the uptrend broke and the environment had clearly changed, it was time to take quick trades and wait for more clarity to get involved on more macro trades.
Friday we cost averaged down to capture a nice trade in the SPY, and on this down open we will once again look to buy for a quick trade. We are in the area where the risk-reward for oversold bounce type trades are worth it.
We have a new point of reference, 1056, to trade against. All the right go-to stocks bounced first Friday, and I will look to them again.
My go-to stocks are:
AAPL
BIDU
VMW
NFLX
CREE, and some other semi-conductors.
Look to see how these handle levels from Friday. This will be important to see if we can bounce further. My gameplan sheet has Friday’s high as a buy and as resistance.
The banks that were crushed also lead the way Friday with the go-to stocks.
GS reached the 135 measured move of the H&S pattern from January, and bounced hard.
JPM also finally had a potent bounce.
FCX and X also bouncy with this market
IF you sold Gold into historic highs, the 20 day seems to be holding it for now. I nibbled around 115.25.
The bottom line is, you need to listen to the technicals and put your contrarian hat on at extreme levels. Never chase the market, and when things change don’t be afraid to get out of stock.
If you are prudent and sell when you need to, cash flow trades are always available.
