Stocks, Gold Snapping Back After Sharp Declines

T3 Live

Gold continued its free-fall Monday, suffering its biggest one-day loss ever, and the weakness spread to the equity markets as the S&P saw its largest decline in five months. The 2.3% loss in the S&P engulfed all of last week's bounce and put the market in short-term oversold territory. Both gold and stock futures are set for a healthy up open this morning, and it will be very interesting to see what it leads to. Will the market continue to be remarkably resilient in 2013, or are recent market dislocations a sign that the long-awaited deeper correction could be imminent?

After a lower open in the indices yesterday, stocks faded throughout the session, with selling intensifying after news of fatal explosions near the finish line of the Boston Marathon. The S&P 500 ETF (SPY) dropped below its 8- and 21-day moving average in one trading session, creating a big engulfing bar on the chart. The next support level to watch, if this gap up does not hold, is the 50-day at $154.06, which lines up with the gap from March 5.

Through sector analysis, you could see that all was not well under the hood of this market.

The Transports ETF (IYT) has long-since lost its leadership role and saw a harsh sell-off again yesterday. The IYT put in a big engulfing bar as the ETF retraced more than 4%. It is a red warning sign for the market to see this type of action in an important sector. The ETF came down to retest the neckline of the Head and Shoulders pattern that has been forming since January. A break below the neckline could bring our more sellers.

The Homebuilders (XHB) was the weakest of them all, shedding almost 5% yesterday and trading all the way down to its 100-day moving average following yesterday's weakness. It also looks poised to break the intermediate uptrend support since August 2012. A break below yesterday's low of $28.09 could take us down to the new year's gap at $27.12.

The Financials (XLF) tried to hold up early yesterday but followed the weakness in the market on its way to a 2.11% loss. The ETF was still positive just before 11am ET, but succumbed to the weakness in the broader market. The banks have kicked off their earnings season with solid earnings last week from JP Morgan (JPM) and Wells Fargo (WFC), but both stocks closed lower despite surpassing supposed consensus expectations. Yesterday we got a strong report from Citigroup (NYSE:C), but it couldn't hold pre-market gains as the market tumbled. Goldman Sachs (GS) was the latest bank to report this morning, and like the others delivered a good report but is only marginally higher pre-market.

Retail (RTH) has been leading the market up recently and yesterday showed relative strength with only a 1.68% decline, but also lost its 8-day moving average. Next support level is the 21-day at around $49.12

The sell-off in Gold (GLD) intensified over the weekend as GLD slipped another 8.8% yesterday. The major support level of $135 that we highlighted Friday was reached yesterday as GLD went as low as $131. The measured move of the recent macro range could take us down to $124-127 level, but Gold is bouncing this morning back to that $135 area.

Silver (SLV) dropped another 12.6% yesterday after also breaking major support Friday. If today's gap up doesn't hold, the next major support level is at $20.70 level from March 2008's pivot highs.

Keep an eye on stocks that are reporting earnings the rest of this week.

Yahoo! (YHOO) reports Q1 earnings after the close today with estimated EPS of $0.24 on revenue of $1.1B. The stock put in a new 52-week high at $24.99 level yesterday before pulling back into its 8-day moving average. Next support is sitting at the 21-day moving average at $23.45.

Intuitive Surgical (ISRG), which reports Thursday, is expected by analysts to book a profit of $3.99 a share during the first quarter, up from $3.50 a year ago. The company has enjoyed double-digit year-over-year percentage revenue growth for the past four quarters. The majority of analysts (78.6%) rate Intuitive Surgical as a buy. The stock saw a major sell off late February/ early March and just started to perk up again since March 18. It saw a nice breakout on April 11 which helped the stock to reclaim its 8- and 21-day moving average. The 200-day at around $520 marks the next level of resistance.

Microsoft (MSFT), which also reports Thursday after the close, is expecting $0.68 in EPS on $20.5 billion in revenues for expected year-over-year growth of 13% and 18%, respectively. The stock continued to show weakness after its big sell-off on Thursday last week due to a big decline in PC unit sales number, dropping below its 200-day. The next support level is sitting are at 50-day at $28.15, which lines up with the rising trend line since December 2012.

Apple (AAPL) Apple shed another 2.3% Monday and is teetering on the edge of pivot support at $419.. As the stock held this level twice previously, often the third time is the "charm" for a breakdown. A break below this level could bring us down to retest the support of $408, but the next major support level isn't until the $380s. Could AAPL provide a trade heading into earnings?

Google (GOOG) has been trading in an ascending channel and forming a bear flag pattern after its four-day sell off earlier this month. It failed to reclaim support of the 8-day moving average yesterday and a break below yesterday's low of $777 could bring out more sellers.

Las Vegas Sands (LVS) has been acting better but failed to build on to its recent gains as the stock slipped more than 4% yesterday. If it doesn't bounce off this key moving average today, we could see a further down move to retest the next support at $50.96 from the recent pivot low.

Facebook (FB) saw a break-down out of its ascending channel at around $27.25 and went as low as $26.36. Use yesterday's low as the new point of reference -£ next support is standing at $26.11.

Live in South Florida? T3Live is hosting an exclusive trading education event in Boca Raton, FL on April 26th and 27th. The event at the beautiful Boca Raton Resort & Club has limited seating, so sign up today.

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


View Comments (0)

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.

  • 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
  • Only 4 states will see cuts to food stamps

    Cuts to the nation's food stamp program enacted this year are only affecting four states, far from the sweeping overhaul that Republicans had pushed, an Associated Press review has found. As a result, it's unclear whether the law will realize the estimated $8.6 billion in savings over 10 years that…

    Associated Press
  • "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 Finance58 mins ago
  • 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
  • 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…

  • 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
  • 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.

  • 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
  • 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
  • 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…

  • Gold loses luster on Fed; Barclays cuts forecast

    Barclays cuts gold forecasts, sees increasingly bearish backdrop Bloomberg MA MB MC MD ME SAN FRANCISCO (MarketWatch) — Gold prices dipped Wednesday on concerns about a stronger dollar ahead of the Federal Reserve policy statement and in response to Barclays lowering its gold forecast.

  • 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
  • Fed renews zero rate pledge, but hints at steeper rate hike path

    The Federal Reserve on Wednesday renewed its pledge to keep interest rates near zero for a "considerable time," but also indicated it could raise borrowing costs faster than expected when it starts moving. In a statement after a two-day meeting of its policy-setting Federal Open Market Committee,…

  • 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
  • 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
  • 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.
  • Boeing may have outfoxed Musk, but it could have bigger problems

    Elon Musk is arguably one of the greatest entrepreneurial minds of the 21st Century, but he was outsized an old school aerospace giant. Boeing won the bulk of NASA’s contract for a space taxi.  One of the other companies vying for the deal is SpaceX, the company headed by Tesla’s Musk, will get a…

    Talking Numbers
  • The Government Keeps Helping People Buy Failing Cold Stone Creamerys

    Would you loan someone money to buy a Cold Stone Creamery franchise if you knew that more than a quarter of those loans default? Over the last decade, franchisees in the Cold Stone Creamery ice cream chain defaulted on 29 percent of working-capital loans backed by the government, costing taxpayers…

  • Romney-Sized IRAs Scrutinized as Government Studies Taxes

    The preliminary report attaches data to an issue that drew attention during the 2012 presidential campaign, when Republican nominee Mitt Romney reported an IRA worth $20 million to $102 million. Senate Finance Committee Chairman Ron Wyden said many of these "massive" accounts come from deals…

  • Russian billionaire placed under house arrest

    A billionaire Russian tycoon was placed under house arrest Tuesday in a money-laundering case that has drawn comparisons with a government crackdown on Russia's Yukos oil company more than a decade ago. The Investigative Committee, Russia's top investigative agency, said that Vladimir Yevtushenkov,…

    Associated Press
  • Looking to Save Money on Home & Auto Insurance?

    Speaking with an insurance agent can help identify your eligibility for insurance discounts. Get a home & auto insurance quote today.

    AdChoicesFarmers InsuranceSponsored
  • Play

    Tues., Sept. 16: Watch Humana Stock

    Humana, Global X Social Media Index ETF and Majesco Entertainment are among stocks to watch. WSJ's Chris Dieterich discusses the details with Michael Casey. Photo: Humana

    WSJ Live