World markets bounced overnight after supportive comments from
the People's Bank of China regarding the liquidity crunch on the
country's credit markets. Chinese markets were looking set for
another day of heavy losses, but the new briefing from Ling Tao,
the deputy director of the Shanghai branch of the PBOC, helped to
get the Chinese index back to near the flat line.
European markets focused on the bounce-back in the Asian markets
and are up 1-1.5% across the board.
(INDEXSP:.INX) futures also continue to drift higher into the open,
currently up 8-10 handles. US markets had another volatile day
Dow Jones Industrial Average
(INDEXDJX:.DJI) was down another 240ish points at the lows, bounced
to almost go positive, and then faded into the closing bell to
finish in the middle of the day's range.
When you have extreme volatility and a close toward the middle of
the day's range, the result is something called a "doji
candlestick." A doji is a candlestick of indecision, and at the
very least can be expected to lead to a pause in the recent
direction, which in this case was a sharp four-day sell-off. Buying
stocks for quick snapbacks has been possible at key moments over
the last couple weeks, but upside follow-through has been scant.
This morning obviously traders will be trying to make a judgment
about whether they can buy this up open, or whether it's another
dead-cat bounce in a market that is headed lower. At the very
least, if you are a short-term trader, I would give it 30-60
minutes before doing anything substantial.
SPDR S&P 500 ETF Trust
(NYSEARCA:SPY) can reclaim the 100-day MA around $158ish, the ETF
might try to get into yesterday's gap that starts at $158.43 and
gets filled at $159.07. There is some bigger resistance that comes
into play closer to $160.25-160.96. Also keep in mind the
possibility of window dressing into the end of the quarter. If the
opening gap doesn't hold, we have a new point of reference at
$155.73 and then major support in the $153.55-154.16ish area.
Today our firm will go over some of the stocks that went green
first yesterday and showed relative strength. We will also touch on
some of the themes and stocks in our game plan.
Tesla Motors Inc
) rallied off its 21-day with a steady pace to close the day up 2%
at $101.50. We highlighted TSLA very often lately as the stock
continued to show lots of relative strength. The stock closed on
highs, signaling potential upside follow-through the following day.
Next resistance stands at the recent pivot high of $107.13, then
$109.50 is the level to watch after that.
) found some support at the prior pivot low of $32.50ish and
rallied 1.38% to close at $33.72 - back above its 50-day MA. The
stock already erased most of its losses from last week's sell-off.
Some continuation to the upside today could lift it back up above
the 8-day and 21-day MA at $34.20ish. If it does climb above that
level, there could be some additional power added to the rally.
) found some support at the $209 level and went positive in the
afternoon after grinding higher for the whole session. The stock
did give back some gains into the close to finish with small losses
of 0.60% but it did hold the recent upper floor of $205ish. NFLX is
now back above its 50-day MA. The longer it holds above yesterday's
lows of $209ish, the higher probability it could regain some upside
momentum. Next resistance sits at $220ish.
) briefly breached its 100-day MA on Friday, opened below that on
Monday and spent the whole morning below this key moving average at
around $171.20 until it picked up some upside momentum around 2:00
p.m. ET and penetrated through this resistance to close the day up
0.6% at $173. Look for continuation to the upside today as the
stock closed on highs and looks poised to reclaim its 8-day and
21-day MA for a move back to the 50-day MA at $177.55.
iShares Barclays 20+ Yr Treasury Bond ETF
(NYSEARCA:TLT) put in a new low at $107.76 below rallying 0.42% to
close at $108.85. The ETF is still well below the bearish gap from
Thursday, and very stretched from its 8-day and 21-day MAs. Use
yesterday's lows of $107.76 as the new point of reference to trade
against as it could try to get a small bounce to $111-112 before
potentially turning lower again.
Gold (NYSEARCA:GLD) still feels heavy after the recent breakdown at
$130.50, but looks like it's trying to hold the new pivot low of
$123.30ish. GLD is hanging by a thread at this level, and the
longer it stays below Thursday's gap at $126.40, the higher
probability it could see another leg lower toward next support at
Silver (NYSEARCA:SLV) is also hanging by a thread at the new pivot
low of $18.80ish. The chart still looks very bearish as SLV is
below all key moving averages. A break below $18.80 could lead to
another round of selling.
Goldman Sachs Group Inc
) opened right below its 100-day MA, which added some more pressure
to its recent sell-off until some buyers stepped in at $148.71 to
help the stock close off of lows. However, GS couldn't regain the
100-day MA at the close, showing the bears are still in control. If
it doesn't try to reclaim the 100-day MA at around $152 and the
50-day MA at $154ish in the next few sessions, we could see sellers
step in again.
(YHOO) saw a big drop right off the open to send the stock all the
way down to its 100-day MA at $23.88. Yahoo finished the day down
4.45%. Active traders could use yesterday's lows of $23.88 as the
new level of interest to trade against. YHOO stock could get a
quick bounce at the 100-day MA as it's a bit oversold at this
First Solar, Inc.
(FSLR) has been to stair-stepping lower after breaking its support
floor of $44. Recently it's been hanging by a thread at $40.46 and
looks poised to make another leg lower once this new pivot low is
broken. FSLR has lost the support of all key moving averages after
the recent weakness. Next real support is the 100-day at $38.40.
(EBAY) is another more bearish looking chart, as the stock has been
grinding lower with an accelerated downtrend in place since May 17.
A break below $49.50ish could bring in more sellers.
Again, this is a tricky spot to know whether to chase pre-market
strength or fade the rally. If the S&P wants to rally in the
next few sessions, we do have some room up to 1598-1606.