SPY got hammered today as investors begin to take the possibility of a US debt default more seriously, trading below key support levels. SPY closed below the 100 and 50 day moving averages today. For now, it is time to stay light and in a wait-and-see mode as things are uncertain regarding the debt ceiling situation. $129.63 is the next point of reference. Look to market leaders to buy potential dips, but don't start too early. Tail risk is high right now.
Potent down day in QQQ, as the Nasdaq led all indices down 2.7%. This is a sign to lighten up on your positions, but $56.87 is the key level to hold for strength and upside momentum. Watch the price action and be cautious.
There will be an opportunity to buy back market leaders once this market settles, and BIDU is certainly one of the market leaders after a strong earnings report. This is a stock to buy a dip, but wait for key support levels. First zone to test a buy back is a retest of prior highs: $156.06-$152.90, which is the 10 day moving average. If that zone doesn't hold, look to bigger support level of $147/$147.50. BIDU is trading far off its moving averages, it would be healthy to see some digestion in this stock before working its way higher.
AAPL is another go-to stock for strength after a blockbuster earnings report this quarter. AAPL is extended well off its moving averages. First spot to test a buy back is $383.90, which is the low from its earnings gap and coincides with the 10 day moving average. The next level to test a buy back is $366-$364.90, a retest of prior highs.
It was noted earlier this week that the OIH's were coming into the resistance area that was highlighted from the previous buy entries, which was a good spot to lighten up on the trade. $155-154 is the first area to test a buy back. $150 is the next key area to hold in the OIH's, which is support of the 50 day moving average. Remember to buy dips in the market leaders when the market is in correction mode.
When the market has big down days like we saw today, look to the stocks highlighted in previous newsletters that are showing relative weakness. RIMM (July 14th), NTAP (July 14th), and RVBD (July 25th) are weaker than the market and are trading below key moving averages . The market closed the day -2% and these stocks closed -5.95%, -4.5%, and -6.3% respectively.
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