Yesterday the S&P had its most potent down day in two months. If the Bears have any control they will not allow a 60-minute close above 1172-1175. I am small net short SPY overnight and will add on this up open, but if we do get above 117.50 and hold for 60 minutes I will be quick to cover! Since September 1st this type of trade has not been rewarded so I will not be stubborn. Micro support is yesterday’s low at 1159, then bigger support is at 1148-1152 (that’s where I would cover if the trade works out).
Tech
Apple Inc. (AAPL) shares had a monster run into earnings, and as a rule of thumb a stock with that type of run into earnings generally does not fare well after the report, even if numbers are good. We were out of macro shares before the announcement. Now I do think stock will take some time to trade in this new range between 300-318, but yesterday Apple Inc. (AAPL) bounced back with some strength to fill some of the gap, a bullish sign.
Baidu.com, Inc. (BIDU) has been very whippy, we are still in tier one long and small options.Yesterday was not easy. Baidu.com, Inc. (BIDU) did close in the range of 100-105, so not much has changed. Let’s see where we are Thursday before earnings around 3:30. I will go over the strategy more in depth at that point in time.
Amazon.com, Inc. (AMZN) has fallen victim to some of the weakness in high beta tech, but still holding this upper level. I will avoid for now, but keep this leader on your radar.
Netflix, Inc. (NFLX) has been drifting lower the last few weeks and has earnings after the close today. I might price out some options around 3:30, I will keep you posted on the Virtual Trading Floor.
VMware, Inc. (VMW) and the rest of the cloud stocks, Equinix, Inc. (EQIX), Citrix Systems, Inc. (CTXS), salesforce.com, inc (CRM), etc. are all broken. We sent this note when VMware, Inc. (VMW) sold 85 and salesforce.com, inc. (CRM) broke 116. They are just scalps now, but we will keep a close eye on them.
Casino stocks broke upper levels for the first time.
Las Vegas Sands Corp. (LVS) felt tired this week and we got a nice short yesterday. Support at 35-36 should hold.
Wynn Resorts, Limited (WYNN) broke an upper level bull flag; watch yesterday’s low as the action area. Big support is around 96.50.
MGM Resorts International (MGM) got secondary offering at 12.65 and got slammed. It’s worth a small look at 10.55 for a scalp long.
Banks
Goldman Sachs Group, Inc. (GS) had some follow through with earnings but traded off the highs. It needs time before it is a compelling swing again.
Bank of America Corp (BAC) had a tough day yesterday with news that PIMCO, Blackrock, the NY Fed and others are suing Countrywide for $47 billion in mortgage putbacks. A couple weeks ago we liked the pattern in Bank of America Corporation (BAC) but were stopped out 12.90. Normally we would look for an 80-20, but this foreclosure situation is explosive.
Watch Morgan Stanley (MS) and Wells Fargo & Company (WFC) earnings out today.
Gold took a hit yesterday, but we sold macro longs last week. This is why you never chase and when a parabolic curve starts, you watch close and take profits. Gold will need time to repair, and SPDR Gold Trust (GLD) can see 123-124 over time.
Rare Earth Resources Ltd (REE) had been great for momentum traders, but is a high risk scenario. Guys did awesome in our chat as we went after it around 8.60, but now it’s extended. Another Rare Earth stock to watch is Molycorp (MCP).
This is a time to let bulls prove that yesterday was a one day wonder, but I am leaning short for a SPY move down to 115.25 in next few sessions.
