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, 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, QQQ, AAPL, BIDU, GLD

SPY opened positive and stayed positive until the Fed announcement. It initially popped just before the announcement, and then fell sharply to break lows of the day. But this time around, dip buyers stepped in aggressively and the market staged a historic rally, with the SPY rallying 7 points in the last 80 minutes of trading.  SPY closed the day around +4.7%.  The bounce that traders were looking for finally happened.  There was a clean 80/20 reversal trade in SPY on heavy volume.  Seeing how the market bounces over the next several days will be important to judge the intermediate-term outlook.  This should lead to a Day 1 in a short-term rally, and it's very possible this was the bottom of this move. Use today's low of $110.27 as the reference point.     Below is an hourly chart of the S&P with outlined Resistance Areas.  The Breakdown level is 1260-1250, which will be heavy resistance/"line in the sand."   We saw a rally across the board in the last hour of trading.  There was early strenght in high beta tech leaders, which never broke below the lows of yesterday.  Below is a chart of the QQQ's, which put in a reversal bar on the daily chart today.  The QQQ's were 16% off the yearly highs at the lows of today. AAPL was a stock that acted best when the market was getting hammered.  Although AAPL had a pull-off from highs, it held support of the 50-day moving average, whereas the S&P is trading far below key moving averages.  AAPL was 12% off the yearly highs at the lows of yesterday.  The stocks that acted best when the market was in correction, are the stocks to target for longs when the market rallies. BIDU showed relative strength to the market today, closing over +10%. This is a stock to play if the market rally can continue. GLD opened at new highs again this morning and was very extended on the longside.  As we saw a lot of reversal trades in stocks and indicies that were extended to the downside, there was also a calculated reversal trade on heavy volume in GLD through the 80/20 strategy, as GLD failed to hold new highs.  If this trade leads to more downside action, it could breed confidence to a bounce in the market.  STOPS in GLD 80/20 Trade: $173.15 (today's high.)

Actionable Trades: SPY, BIDU, AAPL, OIH

The possibility of a US debt default still weighs heavily on the market.  Today we saw a small oversold bounce in the morning, which was met with selling in the afternoon for the SPY to close on its lows. SPY is trading 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.  

Above is a short term picture of SPY, so when we hit oversold readings like we saw this morning, the active trader can take advantage of cash flow trades.  As for the swing trader, wait for more data and precise levels. Some market technicians are looking at this macro Head and Shoulders pattern that could be developing in the SPY.  This pattern is triggered with a break of the neckline that stands at $128/$128.50.  If this pattern triggers, the target is $120-$117, which corresponds with a big support area from last November.  It is hard to be short going into the weekend with the headline risk that is out there.     
   

Today we saw a small bounce for the active trader but for the swing trader, wait for more clarity.  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. 
       

  

Sometimes in the market, there are times to be in cash, and now is one of those times.  

Actionable Trades: SPY, QQQ, BIDU, AAPL, OIH, RIMM, NTAP, RVBD

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.  

 

Actionable Trades: SPY, MCP, BIDU, YOKU, INTC, V, SLB, SLV, TZOO

SPY is holding the $133 level for now.  There are a lot of strong earnings from market leaders, but it is waiting on a resolution to the debt ceiling.  The chart still looks constructive as we flag in front of resistance and hold above key moving averages, but the action right now is very headline driven. While most expect a deal to get done at the 11th hour, it is important to stay plugged in.  Tonight we saw positive earnings from AMZN and LVS.  

Trade Update:  MCP has been a good focus in the past week with the first entry at $55 with an additional add-on buy above $61.  It closed strong today, +6.25%.  Use your own trading rules to take profits.    

 

BIDU has been another good targeted trade as it made a strong move into earnings.  Positive earnings were released last night.  BIDU gapped above 52-week highs and looks good for higher prices.  Wait for a few days of consolidation of this big move as it is extended from previous buy entries.

 

The Chinese internet sector showed relative strength to the market today after a strong earnings report from the leader in the sector, BIDU.  YOKU is a laggard play in the sector, but has a decent chart set-up and closed the day +9.50%.  Today was the first day up in this stock, look for continuation over today's high of $37.45.   

 

The semiconductor chip makers have had solid moves from stocks like IBM, MSFT, and INTC. The stock is a bit of a slow-mover, but a close above $23.25 in INTC could trigger a move to new highs.   

  

The credit card sector is performing well.  Visa has earnings tomorrow, Wednesday, July 27th, after the close.  It could have a run into earnings or wait til after to make a move.  Look for a momentum play above 52-week highs of $90.83. 

 

SLB, an oil stock, posted earnings last Friday, July 22.  It is holding the gap-up and consolidating in front of 52-week highs of $95.64.  This could have a momentum move through those highs.  Watch the price action in this stock.

 

SLV is holding above the 3 month range.  An additional buy is above $39.90-$40.  Also look to the chart of FXE which looks good for higher prices, which has a positive affect on commodities.  

For the active trader, TZOO is setting up for a quick trade.  Although, it had a big gap down on earnings, it is holding up well and the range is getting very tight.  Look for a move above today's high of $61.60 with an add above $63.27 to fill some of the earnings gap.  First resistance is $67.28.