By: Scott Redler
The market broke its uptrend back on January 21 by breaking through 1,130 on the S&P. Since then it has made a series of 30-40 handle moves, with each one containing a “lower high” on the indices. We traveled from 1,130-1,071, then back to 1,104–a lower high–then went all the way down to 1,044. Now, we are opening near 1,083. Will this market make “another lower high” is the crucial question: Bears must contain the 1,085-1,095 area in order to maintain control.
The Rundown:
- Tech has been great lately. Starting on Thursday all of those tight ranges we isolated on were resolved to the upside. Now it’s time to see where they can go.
- Apple (AAPL) was a buy at $195-197. Now you need to see how it handles the $202-204 area.
- Research in Motion (RIMM) was a buy at $66 and again at $68. I sold it on Friday, as it brushes against the huge gap. It’s a bit extended right now, but this stock stayed strong even as the market pulled in late in January and early on in this month.
- Amazon (AMZN) looks worth some attention here. I went out long on Friday and will add at around $120.50 anticipating a move to the $122-124.50 area.
- Cree (CREE) triggered at $58 on Thursday. The stock absorbed Friday’s down open. Now the next area is at old highs.
- Select semis remain very strong.
- Google (GOOG) still has not performed well at all. It’s on my radar, as I am looking for a complexion change. I would nibble above $537, but it really needs to get through $542 on massive volume to clear the lower consolidation zone. Maybe options guys want $550 come Friday, so I will watch.
- Baidu (BIDU) continues to power higher. I’m not really trading the stock at this point unless it does a push-through failure at Friday’s highs.
- Commodities are up this morning, with gold filling its gap from last week. We are also opening above the descending channel in Gold. There was a great RedDog reversal trade in the metal on 2/5 that has not violated any stops since then. So, if you are long from $104ish on the GLDs, sell some here and trail the rest. With the Olympics going on in Vancouver and non-stop talk about Gold, it seems like an almost natural time for the trade to kick back into gear.
- Last week, I isolated Freeport McMoran (FCX) and U.S. Steel (X). FCX we said has room to $76-78ish to take back some of its downmove. It’s opening around $75.50 today. X is the same story, but our target bounce was to $49-52. It is now entering the lower end of that range.
- The financials have lagged–there is lots of bad press around Goldman Sachs (GS) with Greece. See if it’s blown off some, or if it continues to get pressured. Above $155 we could see a squeeze gap fill up to around $157.50ish. If it goes negative and trades below $153, I will look to short and see how it handles around lower support ($150-151).
Once again, there are a ton of headlines to watch out for this week. GREECE SHOULD NOT BE BAILED OUT! We need some tough medicine finally. I like the nuclear power headlines, that’s something that should have been done years ago.
Last week we had lots of pricepoint trades to buy, now it’s time to see what resistance stops this bounce–OR if this is the start of a new move with 9% down to 1,044 being “the” correction. The market will tell us, and we will listen.
