Yesterday the market tried to push through the highs and then reversed. The indices did a small Red Dog Reversal (Outside Day). Most high beta tech stocks opened above recent highs and became sell signals once those areas were breached. Apple Inc. (Nasdaq:AAPL) (120.18) and Google Inc. (Nasdaq:GOOG) (629.80) were the first to do so, that gave some quick traders a heads up to clean up some positions. Yesterday was the first distribution day in a while; it takes three to derail a strong uptrend.
A re-test of 1197-1202 in the S&P would make sense and be healthy. I’m short SPY this morning to hedge some longs and will be looking for an easy cover into the 120.50 area in the SPDR S&P 500 (ETF) (NYSE:SPY). With this method, I can be open minded to buy back in at the right support. Very major support for the S&P under the re-test is 1188-1192; a breach and close below that level would be a bit concerning for bulls.
Gold, which we trade with the SPDR Gold Trust (ETF) (NYSE:GLD) and Silver (even more-so) reversed hard yesterday and punished those chasing a parabolic move. As moves get extended, and especially when they get parabolic, I generally look to take profits into that strength. Some traders look for that calculated short in silver through the iShares Silver Trust (ETF) (NYSE:SLV) yesterday and were successful on it, and some will probably short vs. yesterdays high or off this up open for some follow-through to the downside. I will use yesterday’s low as a major pivot for most stocks and indices.
Apple Inc. (Nasdaq:AAPL) opened above recent highs yesterday and when it traded down hard it was a sell signal, to me, for the broader market as well as AAPL itself. Watch yesterday’s low as an important pivot for longs and shorts.
Baidu.com, Inc. (Nasdaq:BIDU) the range is getting very tight and we could get some resolution soon. We would likely need the market to cooperate for that break to come to the upside.
Google Inc. (Nasdaq:GOOG) I will avoid this one for the time being after yesterday’s reversal.
Amazon.com, Inc. (Nasdaq:AMZN) has been unable to get any traction through highs and still needs time.
Netflix, Inc. (Nasdaq:NFLX) is trading in a big range and is nothing more than a range trade at this point. There are better opportunities out there in my opinion.
Riverbed Technology (Nasdaq:RVBD) had a pretty potent down day yesterday and has been choppy up here after its post-earnings run. I will avoid it unless something changes.
Sohu.com Inc (Nasdaq:SOHU) couldn’t hold up after its big break out, not a healthy sign for the time being. It also is nothing more than a scalp right now.
VMWare, Inc. (NYSE:VMW) has started to look a little better after holding down in its lower range for weeks. It’s one I will watch close to see if it can catch a bid.
Goldman Sachs Group, Inc. (NYSE:GS) could have been a nice targeted short yesterday, and now the 164-165 area could be good area to look for a bounce in this bank leader.
Bank of America Corp (NYSE:BAC) had a nice move off the lows, but is still in the dog house with fraudclosure and needs more time before it is more than a quick scalp long in my view.
Wynn Resorts, Limited (Nasdaq:WYNN) had a potent down day after extending above the technical target of 115. If you are going to trade this now, I would recommend to keep it small and tight.
Las Vegas Sands Corp (NYSE:LVS) is showing some topping type action and was downgraded today. It could test the $50 dollar area, but don’t get greedy with shorts in this monster stock.
MGM Resorts International (NYSE:MGM) has been trading better and perking up, trying to catch up with its cousins WYNN and LVS. Right now, though, I feel it needs more time to set up.
Rare Earth Resources Ltd (AMEX:REE) could have been a nice small long yesterday before it reversed. The rare earth group, which also includes Molycorp, Inc. (NYSE:MCP) and the new Market Vectors Rare Earth/Strategic Metals (ETF) (NYSE:REMX), was great last month, but some traders think that explosive type action may be done for now.
Oil Service HOLDRs (ETF) (AMEX:OIH) had an outside day yesterday, which often leads to a rest or pull-in.
You may have noticed a theme in my individual stock commentary, that nothing it very compelling within this range and stocks needs time to re-set up before I really feel comfortable getting aggressive. If you are a nimble active trader, sit back and wait for this action to play out. If you are a swing trader or longer term, there is no reason to be alarmed if you are long. Yes, yesterday was a distribution day and it may be prudent to clean up some positions and take some profits, but it takes three days like that to really put this long-term uptrend in jeopardy. We have not gotten paid short recently trying to short after these distribution type days, and we will not make that mistake again. But if the market shows sustained weakness, we will not hesitate to switch sides and scan for the weakest stocks.
