By: Scott Redler
Since the February 5th reversal, we’ve been buying the dips, buying the breakouts, rotating to the next strong sector and holding multiple positions for weeks-to-months. But now we are in a corrective phase. The technical damage starting on April 27th started adding up, then we finally broke the 1178-1182 area to enter a correction. During corrections, strong stocks build new bases and markets take time to absorb negative headlines. This could be a very exciting time as well as a painful one depending on how you respond and how you prepare your trading day.
I posted the chart of the S&P showing the area of resistance that should contain this market on Wednesday, and then we had the push-through failure Thursday. Friday we saw some downside follow-through. This morning we are looking to see where we can see a small tradable bounce. The first spot to look at is Friday’s low of 1126, then the 1110-1115 range with a big area around the 200sma at 1100ish. The new micro-resistance is 1145-1155 which was Where we opened during Friday’s gap down.
Hopefully most of you are in cash or short. This is a time for small positions and flexible strategies. Playing very oversold bounces with strict discipline and then shorting resistance like we did on Thursday could be the way to go.
TECH
This is a time for strong tech stocks to build new patterns. While this goes on you trade both directions very light and watch very close on who the new leaders will be after this time period goes by and we see a new attempted rally.
AAPL held it’s gap around 248-249 that’s important support as we move forward. New short-term resistance is around 256-258 after the 264-265 area held this stock last week.
BIDU was a great short Thursday into Friday, and now it will have opportunities both ways. Watch the gap from pre-split, the 72 area, for support. I think 76-78 is new resistance.
VMW needs time after the push through failure on Thursday. It needs time in its range. 58-59 is support and 63-64 is resistance.
GOOG is still not compelling. There is a small lower pivot being put in place.
AMZN is not compelling.
BANKS didn’t make new lows Friday.
GS still has lower support intact. If 141-142 breaks we can see the market sag with banks getting pressured.
JPM is trying to hold the 39-40 area, but it’s technically broken.
BAC is trying to hold 16ish.
CASINOS looks a bit bearish and should be avoided for a while unless you just scalp them
WYNN has big support at 80-81 and now resistance at 84-85. We had a great run here, now time to let it go.
LVS we rode this from 19 to 24 then had some nice strategic shorts. Now it‘s time to let it trade. 23 looks important. If that breaks it could see 20.50-21.
OTHERS
BP saw some positive news over the weekend, but not sure if it will take this much above the area it just broke. 48 is new resistance then 49.80ish.
GOLD we sold a nice amount into historic highs now it’s time to let it consolidate. Remain long some, and if you sold strength I would watch Friday’s low of 119ish but we could see a test of the 10day at 118.30.
There are still lots of headlines to watch out for. Options expire Friday so be wary of that also.
