Actionable Trades: SPY, AMZN, GMCR, WYNN, FCX, OPEN, ANR, IBM

The SPY opened in negative territory and was able to rally positive before selling pressure returned. The early morning move was faded, and major indexes stayed negative until the last hour when a surge of buying entered the market on news that Italy was turning to China to help on the debt crisis in Europe.  After all was said and done today, the stock market closed in positive territory with the SPY closing the day up 0.65% after being down over 1%.  

The SPY continues to trade within this this wide ascending channel.  $114 will be the key level traders are watching, which is a break of the ascending channel to the downside.  Today's gap down was following two days of heavy selling so it was not surprising that the SPY was not able to get a clean break of the channel.  It will be important to see how SPY trades off of this trendline support to see whether a lower high is put in, giving traders conviction on a break to the downside.  Something to note, the VIX continues to hold higher, which could give clues that there could be more downside to come.  




Lately we have traded from the lower end of the range back to upper end of the range, stretching the range in both directions.  1135 is the key support level in S&P.  If 1135 breaks, the first reference point will be 1101, the yearly low from August, but the measured move of the break of the bear flag pattern is around 1010, the low from last summer.  If the bears want to remain in control of the market, a big level of resistance to watch is 1170-1175.




The difference between the strong stocks and the weak stocks is the dips in the strong, leading stocks should be buyable.  Overall, it is more profitable to buy the dips in the leaders than look for a top to short.  "The trend is your friend."  Below are 3 leaders that are trading on the top half of their yearly trading ranges and holding above key moving averages.

AMZN showed relative strength to the S&P today as it closed the day up 2.75% after gapping down this morning into support of the 50-day moving average.  AMZN is a good example of "buying a dip."



GMCR is a beast.  This stock is consolidating in front of 52-week highs, giving traders some conviction to a strong momentum trade through highs, if it can trade above $111.42 on volume.



WYNN is the leader in the Casino sector, and was boosted this morning by news about increased buildout in Macau.  It is holding above key moving averages and is trading on the top half of its yearly range while the market still corrects.    




Below are 3 weaker stocks that are trading on the bottom half of their yearly trading range and trading below key moving averages.  The trend is down in these stocks and until the trend changes, strength should be sold.  

FCX is bear flagging below previous support area of $46-$48 and just started to break below its low from August, which the SPY has not done.  Material stocks were one of the weakest sectors today.  FCX closed the day down 1.62%.



OPEN has not been able to find traction to the upside after putting a high in at $118.66 in April 2011.  OPEN is just starting to break below this low level base.  OPEN IPO'd in May 2009 where it traded in a 10 point range ($24-$34) for the first year. Google announced a deal to buy restaurant review service Zagat last week, which is perceived as a competition threat for OpenTable.



The coal sector has been weak for some time.  The trend remains down in this sector, even after the WLT takeover rumor last week.  




Lastly, it seems like the composure in IBM is starting to change as it trades below the 200-day moving.  It is coming into support of a longterm uptrend line, where it could get a bounce the first time at this level, but it will be important to see how it bounces off of this level.



 

Actionable Trades: SPY, AMZN, ARCO, RENN, MON,

We are beginning to see signs of stalling despite the markets finishing higher for the 4th day in a row.  Strong stocks sold off hardest, which is our first sign of this rally exhausting.  1225 - 1230 has been targeted as a resistance zone for longs entering last week and we have now reached that level.  This would be a prudent spot to sell all longs. The rally came on light volume, we have some important economic data over the next two days, and upcoming holiday will likely make the market even thinner the rest of the week. For the active investor, this is now a spot to potentially test some small short positions and look for a move back to 1200.



SPY are beginning to stall as they come into resistance at $123.50.  It would be prudent to trim some long positions, and begin thinking short in the short-term. The economic data coming Thursday at 10am with the ISM and Friday at 8:30am with Non-Farm Payrolls and Unemployment Rate should be very interesting. Will bad data trigger a sharp sell-off or will it be perceived as the final straw before QE3.




Here are two stocks that are entering overbought conditions and could be due for a pullback.  Look for an 80-20 short-setup in these stocks.  

AMZN has run $15 points in 4 days and it could use a rest.  Look to test shorts as this is overbought in the near-term.



This rent McDonald's franchise IPO has made a big run with the market this week and it can be looked to as a short.  Look to short in this area or higher and add as it comes back through yesterdays high.




Below are 2 charts that have bearish setups and should be looked to as shorts when the market heads lower.  

This IPO was once acclaimed as the "Facebook of China".  It has been plummetting since its introduction to the market and has a setup to make another move lower.



Agriculture stocks were the first group to show weakness today and this is the weakest of the group.  The macro pattern is getting tight and it could be poised for a break below major support levels.

Actionable Trades: S&P, SPY, AAPL, BIDU, AMZN, GOOG

The market continues to perform well since IBD put it in a confirmed rally, holding all key levels. Buying dips has been working if you had the courage to trust this fickle market.  Since Thursday's gap down, the S&P has climbed from a low of 1135 to today's high of 1220.  That's an 85 point move!  The volume in this move has been very light, however, and most if it can likely be attributed to a short squeeze. Whether or not this is a short squeeze or a confirmed rally, what we need to know is that we are coming into overbought territory with the oscillator climbing into the 70s.  It is risky to chase longs after an extended 3-day move, yet shorting strength will be a tricky trade as we do not meet resistance until the 1250 level.  This is a spot to sell some longs if you bought last week, or you can begin anticipating shorts, although it would be prudent to wait for higher prices before trying feelers.  Let's take a look at a chart of the S&P...





The SPY are coming into overbought territory which means it is time to trim longs.  There is minor resistance at the $123.50 level which is where the sell off accelerated.  Today, we reached a high of $122.43, which means there is more room to run.  New support levels are forming as we hold a gap above the $119 level.  We can use $119.26 as a line in the sand if you are holding onto long positions.  If we can continue moving with this strength, I would be a seller of all long positions as we reach $125.00.  The SPY have been climbing higher on light volume the past few days.  Expect a slow paced market this week as trading generally quiets before Holiday weekends.






Below are 5 charts from the Tech sector that indicate downtrends being broken to the upside.  These show that there is strength among the 2011 market leaders, which is a very healthy sign for other stocks.  Traders should look for a follow through day in the near futures but expect a few days of sideways action before moving higher.  

For months, AAPL was weighed down by the uncertainty over Steve Jobs' health and futures with the company.  Since the announcement lifted that cloud of uncertainty, it has traded with relative strength and is setup to trade back to all-time highs, which are only $15 away.

BIDU put in a higher low after CCTV released its investigative report.  Now it is breaking above a downtrend which should lead to higher prices.  

AMZN has been a go-to for leading stocks during the first half of 2011.  Now it is breaking above a steep downtrend channel and is only $15 points off its all-time highs.




GOOG is not acting as well as the other big cap tech names because of the depth of its pullback in August.  However, this is a stock in one of the strongest sectors and the pattern should lead to higher prices.

Actionable Trades: SPY, AAPL, BAC, AMZN, GLD, SLV,

All eyes are on the Jackson Hole Fed summit tomorrow.  Will Bernanke lay the groundwork for a QE3, or the FOMC just stay the course after the "failure" of QE2?  On a micro time frame, the SPY stalled at the macro downtrend line and gave a short term sell signal when it pushed through yesterday's high of $118.24, espcecially after a three day up-move.  On a macro time frame, the lower wedge is still intact but you don't want to see such a strong "distribution" day a few days into the new fledgling rally.  Traders should stay on their toes, and it's difficult to commit capital aggressively in either direction right now.          

Below is a short term view of the S&P.  So far the 1101 low has not been violated.  The S&P did hold the 1250-1255 area, which was important for bulls.  If we see a close below 1140-1145, this will be troublesome.




As traders, we know that it is best to 'sell the excitement' and 'buy the fear'.  Today we saw two perfect examples of that statement with BAC and AAPL.

AAPL continues to trade within the upper wedge on the daily chart.  This morning AAPL was gapped down about 2% (almost 7% at one point overnight) on the news that the company's visionary CEO, Steve Jobs, had resigned. However the stock took the news in stride.  AAPL did not close positive, but it was able to rally off lows to close the day down only 0.65%.  It would be constructive to see some sideways action before suggesting a new trade set-up.    



There had been relative strength in the financials this week, and when news that Warren Buffet was investing $5 billion into the company, it sent the banks soaring just before the open of trading today.  As traders, we don't buy the excitement, but rather sell into it. BAC was a perfect example of that.  It will be healthy to see BAC hold higher after this recent news to gain conviction on continued strength.  



AMZN had a strong reversal bar earlier this week as it started trading into the $175 support zone.  AMZN will need more time to set-up a better trade as there is no clear chart pattern for now.  AMZN is still holding above the 25% retracement level of the move from Tuesday.  To keep the upside momentum in place, it will be good to see AMZN stay above $187.




Gold was down this morning, but the weak stock market intraday sent investors back into Gold.  Yesterday SLV was the weakest of the precious metals, but today it was the strongest.    

GLD is a strong ETF, so after 3 days down into the 21-day moving average, it was prudent to cover shorts.  Some short-term active traders even bought this into support for a reversal trade.  GLD closed positive and on highs of the day.



Strong day for SLV, closing the day up 3.01%., but traders' focus should remain on GLD.

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Actionable Trades: SPY, AAPL, JPM, RIMM, LVS, SINA, GLD, SLV

Markets bounced around in a choppy trading session today, but posted the third straight day of gains.  Equities rose after a stronger than expected increase in July durable goods, faded mid day, but then rallied again to close on highs. SPY closed the day up 1.41%.  Technically speaking, it was constructive action to build on yesterday's gains.  Traders and investors are still waiting to see what the results will be from Bernanke's speech and whether he could being laying the groundwork for QE3.
    

AAPL was a good negative to positive trade this morning.  Yesterday AAPL had a strong move to the upside and played by the rules this morning when it went from negative to positive and pushed higher.  AAPL was a buy above $364-$367 with a target of $375-$378.  That target was reached today as the high of the day was $378.96.  It is important to take trades.  It would be constructive to see some sideways action in AAPL before breaking out of the upper wedge pattern.  



The banks actually helped the markets today for the first time in months.  That does not mean get aggressively long, however it is something to note.  JPM is acting best in the sector.  Yesterday it gave traders an 80/20 entry ($33.35) once it traded back through the previous day's low.  The stop was $32.31, which was the current low of the day.  80/20 trades give calculated, strategic entires when stocks become over extended on the short side or the long side.  Today JPM extended on the previious day's gains, closing up about 3.9%.  



RIMM Is highlighted as a buy through $27.50-$27.80.  This stock has been hammered on the downside this year, but it had surprisingly held up decently after crossing the mini downtrend line at $25.  RIMM is a laggard play, but that doesn't mean you can't make cash flow when it sets up.  Something to note, this is the first time RIMM closed above the 50-day moving average since April of this year.    



LVS gave traders a gap fill play today after a few days of consolidation.  It is trading below the 200-day moving average ($44.45).



SINA showed relative weakness to the market today as it closed down 4.52%.  It is still trading within the marco wedge and the range is getting pretty tight on the daily.  This should resolve soon.



It was a large down day for precious metals, as investors take profits ahead of the Fed meeting in Jackson Hole on Friday.  GLD and SLV were targeted on the Morning Call for follow through trades below the previous day's low.     

If you took the short trade today through $177.50, look to cover as the next support area for GLD is the 21-day moving average at $168.50.  This down move was fast and furious, however when you are in the right trade, you get rewarded. Margin requirements have been raised which is contributing to intensity of the sell-off.



SLV was weaker than GLD.  SLV closed down 4.43% whereas GLD closed down 3.39%. Avoid the lagging metal for now.

Actionable Trades: SPY, GLD, RGLD, AAPL, AMZN, BIDU, OIH, MS,

The market took the gap down in stride today, surging higher to fill the overnight gap before the SPY ended up closing down only 1%.  Selling intensified at noon after some early strength, but buyers stepped in to rally the market into the close. Today's gap down was handled better compared to the action over the two last weeks, where selling generally led to more selling. Today's weakness was led by financials and energy with tech and industrials not far behind.  Where will SPY go from here?  We have had a solid bounce but are trading in the middle of the range, making it difficult to get conviction on the long side or the short side.  Continue to monitor the action, take it slow, and we should get more clarity soon.  

Below is an hourly chart of SPY, so the retracement levels are easy to see.  Right now, the SPY is holding above the 25% retracement level from the bounce off lows.  The 38% retracement level is $116.77 and the 50% retracement level is $115.50.



The trade in the precious metals was largely driven by economic news in both the US and abroad.  GLD continues higher and closed on the highs today.  Last week's pullback in GLD was just a move into the 10-day moving average.  Everyone has an opinion on gold--either it's run is still just beginning or that it is very extended to the upside. If you stick strictly to technicals, GLD is showing tremendous strength as it flags at highs. For the active trader, look for a momentum scalp through highs for a trade, but do not look to get invested at these levels.    



Gold miners are starting to act better with the sustained strength in GLD.  They were highlighted this morning as a sector spotlight on the Morning Call.  RGLD has a solid chart pattern and could trigger for a move soon.  It has held above the previous breakout of $62/$63 and has an upper level consolidation forming.  Look for a move on volume above $70 for new highs.

 

AAPL could use some more horizontal work before setting up for another swing trade, but the dips are buyable in this stock.  AAPL closed down less than 1% today.  Use this as a gauge for the market.  



AMZN has been out of play for a few weeks now.  Is AMZN consolidating for a move higher or setting up for a clean break of this ascending channel?  It is trading below the 50-day moving average and trying to hold support of the 100-day moving average.  Today AMZN closed the day down over 2%. We are not ready to commit to a direction for AMZN, but will be watching it closely.



BIDU closed the day down about 5% but closed off the lows.  BIDU began selling off Monday after negative news was released, which coincided with a great short into resistance that was targeted in the Morning Call (8/15).  After 2-days of selling, is BIDU coming into a buy area? With potentially damaging news filtering out, we are not yet ready to commit to a buying strategy, but this is another one to watch closely as volatility is likely to be high.



OIH closed the day down around 2.5%, showing relative weakness to the S&P's, which closed down 1%.  Looking at retracement levels from the move down from $163 to the low of $122, OIH rallied into the 38% retracement level.  It looks like there is more downside action to come for the oil sector.



Financials continue to be a drag on the market.  A lot of financial stocks (MS, GS, BAC, C) are creating bear flags at much lower levels.  On one hand, banks are very oversold, but based on the technicals this sector is poised to move much lower. The sector could be adjusting to a new paradigm, and several prominent investors are starting to pare down stakes in financials.

Actionable Trades: SPY, GMCR, CROX, ANV, APC, FCX, NFLX, AMZN,

And the bounce continues...  Today, SPY closed the day up over 2%.  Last week's 80/20 trade, a calculated way to buy the dip, stayed intact.  Although it was not an easy hold, as the SPY closed on the lows the following day, the stop of $110.20 was never violated.  Now it is time to highlight some resistance zones, as the easy bounce has now already happened. The first area of resistance is $122-$123.50.  This would be an area to sell longs if you have positions, and possibly test the waters for a short.  Heavy resistance area is $125.50-$126, which is a retest of where SPY broke down from.  Volatility will likely continue to wane as August wears on, and it would not be a bad move to scale back trading.
   

Below is the S&P chart.  It is still important to know the levels in the S&P even though most traders watch and use SPY as a trading vehicle.  Today, S&P closed over the 1200 level that it broke down from on the Monday that Moody's downgraded U.S. debt.  1225-1235 is a big resistance zone to sell longs and potentially look to test shorts.  1248-1268 is a heavy resistance area, which is a retest of the neckline from the Head and Shoulder's pattern that was previously targeted.




3 charts are highlighted below that have held up very well during the market correction.  They are showing relative strength to the S&P's as they are trading above the 21-day moving average, and are trading close to 52-week highs.






ANV is a gold miner.  With recent strength in GLD, gold miners could see some follow through on the longside as well.  Other gold miners are coming up to crucial areas, as well.  Look to NEM that is coming into a long term trendline, GOLD is hovering by highs, and AUY closed at new 52-week highs today.  ANV looks like it is setting up for an actionable trade, if it can close over $41.50-$42, with a momentum add through 52-week highs of $43.49.      




Below are 4 charts of stocks that are trading below the 50-day moving average and have not bounced as strong when the market rallied the last 3 trading sessions.  
  
APC is an oil stock that has had a decent bounce but is now coming into resistance of the 200-day moving average.  $75-$76 is the big resistance area for APC.  Look to this stock to short, on market weakness.  It is trading below key moving averages.



FCX is trading below key moving averages and has not been able to bounce with the market.



NFLX has not performed recently like the leader it once was.  NFLX has been showing relative weakness to the rest of high beta tech.  This stock is trading below the 50-day and 100-day moving averages.  $253 is the first area of resistance and $264 is heavy resistance.



Athough a market leader, AMZN is trading below the 50-day moving average and has been a bit sluggish in the bounce with the market.




Lastly, don't forget to follow-up on Thursday's lower pivot trades to see which stocks performed best.  A few that were mentioned are AAPL, which is now trading at $383 (the easy bounce target), DE is coming up to the $77 target (closed at $76.50 today), OIH has had a nice extension from the lower targeted area and closed at $137.57 today, and GOOG is still trading with in the wedge.