Off the Charts- Oct. 4, 2011

 

Tuesday, October 4, 2011 Brought to you by T3Live.com Off the Charts is a daily newsletter featuring the favorite technical trading set-ups of T3Lives's top contributors   A very volatile day in the markets today.  At one point today the SPY was down more than 2% but managed to close the day well on the highs, up 2.19%.  Equity markets staged a late day rally in response to the EU Bank Aid program.  $107.43 could very well be the yearly low for the SPY but as always we will just respond to the price action.  We will need to measure the action in the next couple of days to see if this afternoon's rally has any validity.  Today is a day to take notice in the market.  Continue taking trades and more clarity will prevail soon that wil enable a more controlled trading environment.  This Friday (10/7) is the jobs number, which could help determine a short-term direction.        Below is an intra-day chart of the SPY on a 5 minute time frame.  If this afternoon's rally has any validity, it needs to hold some key retracement levels from today.  Outlined below are the key fibonacci retracement levels.  The 38.2% retracement level is $110.61, and the 50% retracement level is $110.01.  A hold above either of these two levels would be very construction and prove how strong todays bounce is.  Traders don't really want to see the 61.8% retracement level ($109.40) be tested because then today's rally will not have as much credibility.     iPhone release was disappointing today without the new sleep iPhone 5 design that had been rumored, instead consumers got the iPhone 4S (which actually seems like a major updgrade and a pretty sweet phone!).  AAPL stock took a beating after the news hit, trading down about 5% at one point.  AAPL staged a late day rally with the market to pare almost the entire day's losses, closing down only 0.56%.  Today's low was $354.24, just shy of the 200-day moving average at $353.59.  Continue taking trades for cash flow with this stock and a better macro pattern will set-up again. Typical "buy the rumor, sell the news" with AAPL.     Today was a day to take notice in many stocks across the board.  A lot of 80/20 trades triggered as we were on our 6th down day in the market, reaching oversold levels.  It will be key to judge today's oversold bounce to see if the move has any validity, or if it was just to relieve some oversold pressure.     In times of volatility, ranges expand and moves become a lot more extreme.  LULU, the retail leader, looked like it was ready to completely break down yesterday, but staged a strong reversal today closing the day up 6.18%.  On the 6th down day, LULU could not hold below the previous day's low of $44.71 which was our buy entry with the stop at the morning's low of $42.18.  LULU has room to bounce up to $52/$53 before it is time to reevaluate the trade.    Financials were the strongest sector in the market today amid the news that the EU would provide a backstop.  The banks made lows early in the day, but were able to hold higher in the afternoon before rallying to new highs into the close.  Banks rallied on headlines that the ECB is going to create a "bad bank" to allocate all of the "bad assets."  One of the most battered banks, MS, closed the day up 12.35%.  First Resistance in MS is $16 and second resistance is $16.80.     The OIH was able to stage a late day reversal from very oversold levels.  The OIH closed the day up 3%, one of its strongest closes in quite a while.  If the market continues to hold up from today's rally, look for continuation over today's high of $102.64.  LVS was able to bounce hard off of the yearly low support of $36, closing the day up over 6%.  It will be key to see if LVS has any traction to the upside after today's bounce.  It has room to bounce up to $44/$44.50.     Lastly, let's take a look at GLD.  Is there more downside in store for this precious metal?  This was pressured throughout today's trading session and closed the day down 2.06%.  It is bear flagging just above longterm support but has not been able to rally since its strong pull-off of highs.  Look for a short below $155.25/$155 for a quick move down to $151 but if it can't rally from that level, bigger support is $149.      -Compiled by Vicki Haddow   Tune in live at T3Live.com for tomorrow's Morning Call with Scott Redler at 7:30 am for an update on the markets.  follow on Twitter | friend on Facebook | watch on YouTube You subscribed to us at T3live.com Unsubscribe | Update your profile Our mailing address is: T3 Live 1 State Street Plaza 10th Floor New York, NY 10004 Add us to your address book Copyright (C) 2011 T3 Live All rights reserved. 1.                                 T3 LIVE is NOT a Broker Dealer. 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