Wednesday, September 14, 2011
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Off the Charts is a daily newsletter featuring the favorite technical trading set-ups of T3Lives's top contributors
After a quick rinse in the morning, it was a slow grind up in the SPY until the last 20 minutes of the trading day when the SPY tanked into the close. SPY was able to rally above the higher resistance level that was outlined in yesterday's newsletter ($118/$118.50) but fell just short of last week's high of $120.94. SPY still closed positive, up 1.38%, but the late day pull-in on heavy volume made the move feel a bit like a trap. Today was the third up day for the market. What is next for the SPY? Can it hold higher in this ascending channel and make another push higher, or will it make another attempt to break this ascending channel to the downside? So far, buying and selling extremes in the market has been the only prudent strategy, and it looks like we are seeing another case of that.
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Our list of "go-to" stocks continue to outperform the market and today the High Beta Tech leaders performed best from the "go-to" list.
This market leader continues to outperform the market. It is trading on the top half of its yearly trading range and today it broke above the upper level wedge, but stalled when it hit resistance at the $392 level. AAPL closed the day up 1.22%. After the doji close on the daily chart today, AAPL may need a rest before making an attempt to run into highs. The chart pattern is still bullish and AAPL remains strong. But like yesterday's newsletter stated, it is hard to chase strength in this market.
While the S&P trades on the lower end of its trading range, AMZN is trading on the top third of its yearly trading range. AMZN became a main focus for Off the Charts when it put in a key reversal day on August 23rd and has been on the move ever since. The first entry was when AMZN held up after the reversal and cleared a mini downtrend line at $199-$200. Today was another macro entry at $219-$220, highlighted on the T3Live Pricepoint Sheet today. AMZN pulled off of highs with the market into the close. This stock is just a few points from yearly highs. Continue to stick with this leader.
BIDU was highlighted on yesterday's newsletter as it has been consolidating between $140-$150. Today in the T3 Virtual Trading Floor chat room, traders were all over BIDU as it was showing relative strength early in the morning. BIDU started to clear the downtrend line but did not get a clean move through this level. This stock still looks good for a move higher and will need to clear the big resistance level of $152. BIDU remains a leader; do not lose sight of this trade. The same caveat remains with the market coming into resistance and selling off into the close.
Lastly, VMW has been highlighted on our "go-to" list in the T3 trading community and was highlighted earlier this week on the Morning Call with Scott Redler and Alix Steel. VMW is the leader in the cloud computing space. It was constructive to see VMW clear the $90 pricepoint level that was keyed on in the Morning Call and extended into resistance of $95. It would be healthy to see a day or two of rest for VMW before attempting to trade above the $95.50/$96 resistance level, which is the next buy point.
It was an uneventful day for precious metals. GLD is still trading close to highs but looks like it could set up for an interesting trade as it hovers by the accelerated uptrend line. If the market continues to push higher, GLD could see some downside action. The first entry would be an aggressive anticipation of a break below today's low of $176.05, and the the second entry will be a break of the accelerated uptrend line at $175/$174.50. If GLD breaks and closes below this level, it could see a move down to the $167 level without much damage to its recent, sustained strength. GLD has been feeling heavy for the past week, even when the market has been weak.
Something to note is despite the positive gain and tone in the equity markets today, the credit market did not agree. Treasuries did not turn lower, indicating the 'risk on' trade isn't fully on the table. The TLT tends to trade inversely with the markets and is currently consolidating at highs. We have seen this same scenario over the course of this wide-range consolidation, and it has typically led to lower prices for equities.
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