Market Could Rest Ahead of Turkey Day After Potent Move

T3 Live

Futures are basically flat this morning after two very strong days in the market. Friday we got an outside bullish Red Dog Reversal, and yesterday got the follow through to that pattern with the market's biggest gain in more than two months. Futures are holding in this morning despite a Moody's downgrade of France last night. The rating agency downgraded French debt one notch to Aa1, saying its resilience to future Euro area shocks is becoming more difficult to predict.

The market has become very sensitive to headlines over the past couple years, and all it took Friday for the reversal was an indication that talks between Democrats and Republicans on the fiscal cliff were constructive. Both sides appeared to be holding hard lines and digging in following the landslide reelection of President Obama, but during the first talks Friday each side showed more of a willingness to compromise. Progress will likely need to continue, or cuts pushed to a later date, for the market to maintain its bullish composure.

After a powerful reversal Friday and potent move yesterday, it would be healthy to see some digestion in the market now. Consolidation above S&P 1377-1382 would be a healthy sign for more upside. The next micro resistance level is 1391, then there is a bigger resistance zone at 1403-1408 that the bears might try to defend.

Apple (AAPL) led the cavalry higher yesterday, rebounding from heavy selling over the last two months to give the beleaguered market some leadership. Leading stocks, especially in tech, had been breaking down the hardest during this multi-week correction, which is a sign of diminished risk appetite that traders do not like to see. AAPL surged more than 7% yesterday on no news. The stock is still below all of its moving averages, but as we often see, the 21-day MA is acting like a magnet. There is a gap at around $575 in AAPL that could pose as some short-term resistance if we get there over the next few trading days.

Hewlett-Packard (HPQ) is down nearly 11% this morning after "major improprieties" have come to light in its $10 billion acquisition of Autonomy. The "seriously flawed" transaction resulted in a $8.8 billion asset impairment charge that was reported when the company reported earnings this morning. The unforeseen issue was "linked to serious accounting improprieties, disclosures failures and outright misrepresentations at Autonomy that occurred prior to HP's acquisition," said HP.

Best Buy (BBY) also reported earnings this morning and is down around 4% pre-market. The brick and mortar electronics retailer has been in a steady decline for the last several years, declining 71% since April 2010. There have been suggestions by the company's founder that he may attempt to take the company private, but it's clear that online retailers like Amazon (AMZN) are eating Best Buy's lunch at this point.

With Black Friday shopping coming up after Thanksgiving, retailers in general could be in focus. One pattern in particular that looks good is Target (TGT). The retailer reclaimed its 100-day moving average yesterday and has been showing relative strength to the market. The trigger for longs would be a break higher through the 50-day moving average at about $63.30. The more discount retailers like Target, Wal-Mart (WMT) and Costco (COST) are performing better in this slow economic recovery.

The banks also showed relative strength yesterday. The financial sector is especially sensitive to the fiscal cliff negotiations, and we saw them lose their relative strength a bit after the election. Now, though, we could get a powerful bounce in the sector as progress is being made. Bank of America (BAC) was the strongest yesterday after being upgraded to a "buy" by Stifel Nicolaus with a $11 target. I believe Bank of America will become a double digit stock before the New Year and reach that Stifel target early next year.

The action in the market could slow down as we get closer to Thanksgiving, and there is no reason to press the action after two active days in the market. The ability to sit on your hands is a skill in trading. If you want to be constructive while the market rests, take our Free Online Trading Course to sharpen your trading acumen.

Want to learn the methodology Scott Redler uses to trade the market every single day? His new Swing Trading Course includes the strategies and tactics Scott uses to navigate the action.

*DISCLOSURES: Scott Redler is long SPY, AAPL, BAC.


View Comments (1)

Recommended for You

  • Tycoon buys 30 Rolls-Royces for Macau hotel

    A Hong Kong tycoon has placed the biggest ever order for Rolls-Royce cars, agreeing to buy 30 Phantoms to chauffeur guests at a luxury resort he's building in the global gambling capital of Macau. Stephen Hung's $20 million purchase surpasses the 14 Phantoms bought by Hong Kong's Peninsula Hotel in…

    Associated Press
  • 1 Tip To Lose Belly Fat

    It's Hollywood's Hottest Diet And Gets Rid Of Stubborn Fat Areas Like Nothing Else.

  • Tycoon's arrest sends shock wave through Russia

    Tycoon's arrest sends shock wave through Russia MOSCOW (AP) — The arrest of a Russian telecoms and oil tycoon has sent shock waves through the country's business community, with some fearing a return to the dark days of a decade ago, when the Kremlin asserted its power by imprisoning the country's…

    Associated Press
  • Before You Buy Alibaba, Check Out 4 Top China Stocks

    Before You Buy Alibaba, Check Out 4 Top China Stocks While investors gear up for Alibaba Group 's (BABA) hotly anticipated initial public offering, don't forget about other Chinese stocks that are worth keeping an eye on. Today's Young Guns Screen of

    Investor's Business Daily
  • As Fed takes baby steps, Cramer's trick for profit

    In turn, Cramer says making money in the market, involves looking at the environment through the lens of the Fed. "The trick is to remember that they speak for the common person," Cramer said. "The Fed wants the common person to make money." With that backdrop always in mind, Cramer says it becomes…

  • Costco Stores in Canada to Stop Taking American Express

    “The credit card relationship between American Express and Costco Wholesale Canada will not be renewed when it expires” on Dec. 31, the company said today in an e-mail to Canadian customers. The message was attributed to Lorelle Gilpin, vice president of marketing and membership for Costco…

  • "The Retiree Next Door": How successful retirees stretch their savings

    "The Retiree Next Door": How successful retirees stretch their savingsBy the time she hit her late 40s, Toni Eugenia wasn’t sure she would ever be able to retire. Eugenia, 56, a pharmacy technician who lived in Houston, was nearly $200,000 in debt and

    Yahoo Finance
  • Play

    Citi, Bank of America Offer Discounted Mortgages

    Citigroup and Bank of America will offer mortgages at discounted interest rates to help borrowers with low incomes or subprime credit. AnnaMaria Andriotis joins MoneyBeat. Photo: Getty.

    WSJ Live
  • Norwich Information Security MS

    Online, accredited, top ranked. NSA Center of Academic Excellence. Recognized by the Department of Homeland Security. Download your free brochure!

    AdChoicesNorwich UniversitySponsored
  • CNBC Anchor Calls Out Fed-Hater Bill Fleckenstein In Startling Shouting Match

    CNBC Bill Fleckenstein of Fleckenstein Capital appeared on CNBC's Futures Now program on Tuesday. Futures Now host Jackie DeAngelis came out swinging, asking Fleckenstein right at the top if he was willing to admit that he had misunderstood monetary policy. Sounding taken aback, Fleckenstein…

    Business Insider
  • Beanie Babies creator's sentence debated in court

    Beanie Babies creator's sentence debated in court CHICAGO (AP) — Federal prosecutors seeking to put the billionaire creator of Beanie Babies in prison for hiding millions in Swiss bank accounts told appellate court judges Wednesday that the toymaker's sentence of probation threatens to erode the…

    Associated Press
  • Apple to unveil new iPads, operating system on Oct. 21 : report

    The company plans to unveil the sixth generation of its iPad and the third edition of the iPad mini, as well as its operating system OS X Yosemite, which has undergone a complete visual overhaul, the Internet news website said. Trudy Muller, a spokeswoman for Apple, declined to comment. The iPad is…

  • Margaritaville casino owners seek bankruptcy

    The owner of Biloxi's Margaritaville casino has filed for Chapter 11 bankruptcy protection Tuesday, only hours before a hearing where the landlord aimed to seize the property. The filing by MVB Holding LLC in U.S. Don Dornan, a lawyer for landlord Clay Point LLC, said the company had planned to ask…

    Associated Press
  • Embraer to sell 50 E-175 jets to Republic in $2.1 billion deal

    Brazil's Embraer SA, the world's third largest commercial planemaker, said on Wednesday it booked a firm order from U.S. The deal, which will be included in Embraer's order book for the third quarter, is valued at $2.1 billion, the planemaker said in a securities filing. The planes will be operated…

  • Play

    What the Fed Meeting Means for Bonds

    Janet Yellen & Co. are expected to hint at their timetable for raising interest rates. Here's how investors should prepare ahead of the meeting.

    WSJ Live
  • Best Womens Wrinkle Creams 2014

    Mom reveals simple wrinkle solution that has researchers very excited. Try this free solution today to look and feel years younger.

  • Gilead Stock Is Falling On These Drug Setbacks

    Gilead Stock Is Falling On These Drug Setbacks Gilead Sciences (GILD) shares are backsliding Wednesday on news that the patient drop-out rate for hepatitis C drug Sovaldi is quadruple that of clinical trials. In addition, the biotech's Phase 2 study results

    Investor's Business Daily
  • Here's What Mark Cuban Wishes He Knew About Money In His 20s

    Cuban is the owner of the Dallas Mavericks basketball team. Billionaire investor and entrepreneur Mark Cuban is generous with his advice. When we asked him what he wishes he'd known about money in his 20s, he said:

    Business Insider
  • SHOE COMPANY: Our CEO Just Disappeared And Most Of The Money Is Gone

    "and like that: he's gone." This is an actual headline from a company press release: "CEO and COO disappeared, most of the company's cash missing." (Via FastFT) In a statement, German-based shoe company Ultrasonic said its CFO,  Chi Kwong Clifford Chan, has been unable to reach the company's CEO,…

    Business Insider
  • 10 rock-solid stocks for conservative investors

    10 rock-solid stocks for conservative investors Shares with low volatility can beat their indexes with less risk Bloomberg News/Landov U.S. Bancorp is the cheapest S&P 500 stock

  • Billionaire Investor Says Chinese People Work Harder And Western Companies Could Face Deep Trouble After Alibaba IPO

    Michael Moritz, the chairman of VC firm Sequoia Capital, is a huge fan of Chinese internet companies and reiterated his enthusiasm for the Chinese market in an interview with The Wall Street Journal Wednesday. The billionaire investor described the Alibaba IPO as a “major landmark event” that is as…

    Business Insider
  • Top Analyst Upgrades and Downgrades: AEP, BHP, GE, Incyte, 3M, Tyco, Under Armour and More

    Top Analyst Upgrades and Downgrades: AEP, BHP, GE, Incyte, 3M, Tyco, Under Armour and More Stocks were firm on Wednesday morning ahead of the FOMC meeting outcome. Tuesday’s rally may have sparked higher interest again, and investors are looking for bargains

    24/7 Wall St.
  • Tired of Living Paycheck to Paycheck?

    New website reveals how to save $1,000's when you're living paycheck to paycheck. See exactly how.

    AdChoices Media ForceSponsored
  • 6 Things Debt Collectors Wish You Knew

    The work debt collectors do is not popular, and has become increasingly derided by those who don’t like what we do or simply don’t know the facts about debt collection. Too often, debt collection is painted with a broad brush to create a portrait that isn’t accurate, and doesn’t properly educate…