The market was quiet Tuesday and finished narrowly in the red following yesterday's outside bearish reversal. Indices traded in a narrow range near the flat line for most of the day. There are mixed signals in the market right now, and traders are using this as a time to trim long positions after a strong multi-week bounce. Monday's bearish engulfing candlestick should lead to a few days of corrective/digestive action, but there was not huge volume to that pattern and no major retracement levels have been breached--yet.
Today the S&P tagged its 25% Fibonacci retracement level at around 1403 and bounced, but it does not feel like that will be the end of this pull-back. Overall you can say markets took yesterday's reversal in stride, but there does not seem to be a huge appetite for stocks right here. The low of the day in the SPY was $140.87, which will be a short-term point of reference for active traders. .
Netflix (NFLX) had a nice move off the Disney announcement today after yesterday's weakness, providing traders at their desk with a nice cash-flow opportunity. We will be watching to see if today's 14.1% move leads to something more long-term in NFLX.
Amazon (AMZN) continues to out-perform the market; yesterday's pull-back was minimal and today the stock erased that loss. I expect AMZN to make new highs early in 2011.
Apple (AAPL) feels heavy but is still protecting its lower level support of $572-574. I nibbled on some AAPL long but will use today's low as a hard stop.
Google (GOOG) bounced off of $685 and still looks good.
Facebook (FB) went as low as $26.68, giving some small downside follow-through to yesterday's reversal. Overall it doesn't feel like FB will fall apart the way it has in the past. I covered most of my short and am using a trailing stop at $27.90 for the rest of my position. I will be watching it closely over the next few days.
I have not bought Intel (INTC) in a few months, but it looks interesting here. I nibbled on a little as some semiconductor stocks are holding higher.
I put 3-D Systems (DDD) on the Price Point Sheet today and talked about Stratasys (SSYS) for the first time today as well. These 3-D printing stocks are in one of the hottest sectors in the market right now and have been on some traders' radars for a while. We have seen a multi-day pullback that could be an opportunity to get back in. We listed DDD on the Price Point Sheet as a Red Dog reversal candidate at $42.50
Yahoo! (YHOO) is another stock that I don't play much anymore but is starting to look more interesting on a macro basis. If you only look at a chart from the last three months, YHOO might look a bit extended, but if you zoom out to a weekly chart YHOO is still within a lower consolidation that has formed over the last four years. The stock peaked its head above the 2010 high of $19.12 last week but couldn't hold above that level. Let's see if we can get a weekly close above there this week. Initial targets would be in the $22 area.
At this point I believe risk outweighs reward in a lot of ways. I will wait for more calculated set-ups to show their faces before aggressively buying in again. The contentious fiscal cliff debate will continue to dominate the headlines, which will only lead to an increasingly skittish market as December wears on.
*DISCLOSURES: Scott Redler is long AAPL, BAC, YHOO, DDD, INTC. Short SPY, FB.
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