World markets saw more heavy selling overnight, and the dollar
continues to tumble against the yen as concerns grow that central
banks are losing control of their interest rates. China continued
its slide, dropping 2.83%, while Japan's
(INDEXNIKKEI:Ni225) finished down 6.35% and is back down 20% off
its highs. Despite the extreme turmoil in Asian markets,
(INDEXSP:.INX) futures are down only four to six handles so far.
Early yesterday morning traders were sort of scratching their heads
about why futures were opening higher, but that gap up was met with
heavy selling to push the indices down around 1%. Due to the recent
erratic action, we have recently talked about the idea of taking a
more short-term, tactical approach rather than trying to hold a
"portfolio" of swing trading positions.
With today's gap down we are set to open right back down into the
50-day moving average. Can the market bounce off it again, or will
this time be different? The stock market is often defined by
randomness, but if you map out levels to make adjustments you can
protect yourself and potentially generate alpha. Last Thursday we
had a nice bounce set-up off the 50-day from very oversold
conditions. Today we are opening right around it and I'm thinking
we might not have the same result. If you are going to try to but
the dip today, or even try to position for follow-through shorts,
maintain tight risk controls.
The 50-day MA stands at 1610 and the recent low was 1598. About 24
hours ago we were 30 handles higher, so it makes for a tricky open.
If we can't reclaim the 50-day or close back above 1622ish, I do
think we could see the 100-day MA around 1570 in coming weeks.
On May 22, the market saw an outside bearish reversal at an
inflection point of S&P 1674. The candlestick was a bearish
turn for the market, but some of the damage was even more
significant in individual sectors. That reversal was the first
clear signal to take off some risk or get net short. While we have
staged some multi-day bounces since then, there really hasn't been
a loud bullish reversal signal to wrest back composure from the
Today we will go over S&P levels more thoroughly and some
potential opportunities in high beta tech, both long and short.
) remained weak yesterday, shedding 1.24% and breaking below the
most recent support floor of $432.77. Most traders that were trying
to be long likely got stopped out around $444. The stock closed on
dead lows yesterday, showing very little buying interest, and is
down a few dollars again this morning. If it can't reclaim the
50-day quickly, which stands around $434ish), the next big support
level for AAPL sits at $419. Reuters is reporting that Apple could
be considering bigger screens and a cheaper model for its iPhone
line, so let's see if that helps the price action.
Even market leader
) was unable to shrug off the selling in yesterday's session and
closed below its 8- and 21-day moving averages. The next support
level stands around $870ish, where GOOG broke out from last Friday.
The $855 pivot could be the last line of defense for
intermediate-term traders playing it to the long-side. I would look
to buy this stock on any significant market correction.
) broke below the previous breakout level of $272 yesterday, going
all the way back to $270.45. The fact that AMZN so quickly
relinquished gain from the impressive two-day breakout is not a
positive sign. The next level of support is $265-268 where the
100-day MA could come in play.
) triggered below the $213.80 breakdown level we listed yesterday
and went as low as $206.87 to close just in front of its 50-day
moving average. If it doesn't find any buyers at this key support
level, we could see a down move to the next support level at $197
and perhaps the 100-day at $191.37 below that.
Tesla Motors Inc
(NASDAQ:TSLA ) showed impressive relative strength yesterday as the
stock saw a gap-and-go in the morning. However, it met some sellers
in the afternoon and gave back some intraday profits, but still
closed the day up 3.45%. There is an uptrend that has been in place
since May 15, so let's see if that continues to hold. The $91-94
level is pretty important intermediate support.
At this point, I will likely take a look at some micro strategies
in both directions. I could test some dip buys vs. key levels in
strong stocks, and I could test some follow-through short trades in
weak stocks. The time for tight pattern breakouts and 52-week high
trades is behind us for now. I will stay tactical until we see more