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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Silver Is Now a Value Buy

Value investors, such as Warren Buffet, William O’Neil and Jordan Kimmel are all big proponents of the idea of buying low and selling high. All these extremely experienced investors also look at historical patterns and are always on the hunt for bargains.

Or as traders refer to it, “buying into a pullback.”

Since its ballistic drive up in late April to create new historic highs, silver has plummeted down and the market saw the kind of volatility many traders thought gone in the post-financial crisis era. But rather than continue its free fall to price levels that this writer thought were more in keeping with its historic norms, silver defied expectations and has consolidated in a $5 range over the past seven weeks.


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Some peers of mine who are absolutely first-rate technicians believe silver is maturing into a Bear Flag and may indeed seek out historically normal price levels in keeping with the 1:60 ratio of Gold and Silver. Time may prove their premise correct.

As a trader who keeps his eyes on the price action of the players in a sector, I am of the belief that this range has allowed a few savvy investors to accumulate silver at price point they are comfortable at. If you look at the charts of the silver exchange traded fund, iShares Silver Trust (SLV) you will see that it has held above the 210-period moving averages. The first check in favor of a bullish bias.


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With the uncertainty in the markets over the future of Greece and the effect events there may have on other similarly indebted nations, do not be surprised if investors in Europe rally to precious metals before people in US markets do.

Another check in the favor of the bullish scenario is that from a historical perspective gold and silver prices rise in the latter half of the year. This price jump is spurned on by demand from India as my kin buy mountains of the metals to celebrate religious festivals and the peak of the marriage season.

SLV will languish down here only a while longer and may then seek out the $40 price point. Don't be too surprised if silver is back at the highs by year's end. Smartstops has the reentry price for SLV at $37.72 and the short term and long term stops at $32.33 and $31.42.


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Editor's Note: For more, visit SmartStops.net.