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Could Market Face Gut-Check Today?

Scott Redler

S&P futures are off four to five handles this morning as the Fed starts its two-day FOMC meeting. Recently the market has seen a stair-step move higher, a move that hasn't seen any real gut check type days. For this type of composure to continue, traders would like to see S&P 500 ETF (SPY) hold $149.30-149.50 hold. The 8-day moving average is now at $149ish.

There are a few factors that make me a bit cautious heading into the next few weeks. We are seeing some high RSI readings and February is a historically bearish month. A retest of SPY $148.11 or S&P 1474 can't be ruled out. Pivot resistance now stands at $150.30.

There's a lot of movement in different sectors from day to day, and we are finally starting to get some two-way action. Yesterday we saw a number of recently strong stocks pull back.

The red-hot 3-D printing sector saw its first blow-off of 2013 after some loose faulty upper-level action. 3-D Systems (DDD) sliced upper supper around $67.18 on its way to a 13.86% loss, a good example of why you need to have upper level stops as well as lower level stops. The stock now needs time to repair.

Stratasys (SSYS) reversed on January 22nd and then yesterday sliced its upper range. The stock took out its 8- and 21-day moving averages, giving some intermediate trend traders the exit door. These two stocks will need some time.

Tech stocks continue to take turns being "in-play."

VMware (VMW) is down big, around 18%, this morning after a weak earnings report. This is a prime example on why I don't take stock into earnings. If I want to be involved, I typically use some type of option strategy so risk can be premium paid. Lately a call spread or put spread has been my strategy of choice. Big support to watch is $79.50-81.50.

Yahoo! (YHOO) is up over 3% this morning after beating earnings estimates last night. New CEO Marissa Meyer, the influential former Google exec, has done a great job with the company since taking over, and it could be headed for a strong year. In the short-term, though, it's a bit tough to chase this rally.

Seagte (STX) is down around 6% after reporting its numbers.

Google (GOOG) is hanging tough. Staying above $737-740 would be healthy, then perhaps we could get a momentum move through $758-760.

Baidu (BIDU) is looking better. It's not showing leadership but it's had a nice move off the lows and has a nice flag-type pattern. The next buy price is $112ish, and then a blast above the 200-day could recapture some more macro bullish composure. That next resistance action area stands around $114-115.

Apple (AAPL) finally had a small tradable bounce, which has been a rarity for this stock recently. A move above $453-456 with some power would help get this out of the danger zone. Let's see if it can get a rare day of follow-through day of upside.

Amazon (AMZN) had a pretty nasty day ahead of earnings, which will be released tonight. This has been one of the chosen ones during the recent run. I will trade the stock after the report. I'm not looking for an options play, but I would use some type of spread as premiums are high.

Netflix (NFLX) took the day off after a huge earnings move. Some T3Live contributors on the Virtual Trading Floor(R) caught a cute short as it gave an upside Red Dog Reversal for a short. The next pivot is $160.79 and then $155ish.

Facebook (FB) got back to 2013 highs ahead of earnings tomorrow. It has been a nice trading vehicle since igniting on the November 14th IPO share lock-up expiration. Measure your commitment into the report as expectations are now high.

LinkedIn (LNKD) had some nice follow through yesterday. I've been focusing on this one over the past week, and it has been a nice move from about $116-127. I did trim some yesterday but still have some. I believe LNKD has the characteristics of a potential $140+ stock this year. Use your time frame.

Sometimes with laggard stocks, one man's trash is another man's treasure. Zynga (ZNGA) played that role yesterday, waking up in a big way on big volume. Perhaps we could see $3.20 this week.

Banks have been basing. I think you could watch this group for clues on short-term direction.

The Financial Sector SPDR ETF (XLF) is above the 8-day MA. If it closes below that MA it could see a quick move down to $17.02ish. A small composure change in this ETF could weigh on the market a bit.

Goldman Sachs (GS) has a good pivot to watch around $143. The stock has reemerged as a leader in the sector, and could be important for the group's short-term fate. The 21-day is around $138.

Bank of America (BAC) is still trying to base around the 21-day. The recent floor is $11.02-11.40, and the 50-day is moving up to around $10.84.

The homebuilders (XHB) got a little sloppy yesterday. Let's see if that continues or if its just another day of basing. The 8-day is at $28.51ish.

Metals are getting a small bounce this morning, but this group has been a big disappointment for me. Moving averages are starting curling down. I would only get more excited if the Gold ETF (GLD) ignites and closes above $161.60-162.00. The two-day Fed meeting this week could wake up the group, but I wouldn't count on it.

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*DISCLOSURES: Scott Redler is long WFC, AAPL, LNKD, GE, BIDU, TBT, GE, DBC, MGM, ZNGA. Long LNKD 125 calls, short LNKD 135 calls. Short SPY.