By: Scott Redler
The head and shoulders pattern ignited yesterday as the market got more follow-through to the downside. On June 21st we were at 1131 and now, about a week and half later, we are around 1025 (over 100 handles lower). That’s a nice down move if you were prepared with the 1120-1140 resistance zone as the potential right shoulder. This bounce was necessary to complete our head and Shoulders top pattern.
Yesterday the 1040 neckline broke, and over the next month or so we should see a move to around 940-970. But as ACTIVE, CASH FLOW traders we trade every day. At this point I will see how market acts in the 1013-1018 area for some type of long if it develops. We went heavy short on my note last Thursday around 1080, but I did cover a third into yesterday’s close around 1130, and will cover a bit more if we can get below 1020 this morning. I need to take trades. I will hold some of my macro shorts until we break 1000 and get to my targeted areas of 940-970.
On to today’s trade. I will watch yesterday’s low very carefully to see if we trade through it early and find some support for a quick cash flow bounce.
In Technology stocks, the technical damage added up and we had some nice shorts in this week.
AAPL was a nice short for us around 269-270 as it broke upper range. Now we need to see how it handles 247-250.
BIDU broke multi-month uptrend around 72-73 and now is testing lower support around 65-66, this might need to hang here for a bit.
AMZN was an awesome short for us from 123, and it did test the October gap and now 108 is the new point of reference.
VMW had a big move off highs, now it’s worth a sclap long if it can hold 60-62.
SNDK also broke it’s multi-month uptrend. And now could be worth a look for a scalp long if it holds 41-42.
GOOG is a disaster, a laggard and just keeps drifting lower.
NFLX down move was telegraphed well after the potent down move on June 21st and now it’s at a spot that could hold for a day or so.
Banks, which have been lagging and a great indicator of action broke their lower range yesterday. Monday was very helpful when they gave back over 50% of the Friday “reform gains” this gave us clues that this down move would hit this week.
GS is breaking the 131-132 area and next big support is 125-127.50.
JPM is also breaking lower support and could see 35 with some time.
Casinos got hurt quickly after erratic action last week.
LVS went from strong-to-weak in a flash. I will look for a small bounce in the 21-22 area.
WYNN, I won’t trade but could hold 75 for a day or so.
MGM got crushed. It could be worth a trade from 9.00-9.50 back to 10ish but not more.
Gold continues to hold uptrend and has been quiet. Make sure 119.50-120 holds on the GLD. That is my stop. If it takes off I will add.
