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.
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.
