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Faulty Signals Beginning to Mount

Scott Redler

The action is getting very choppy in this upper range in the S&P as it tries to hold above the prior breakout level of 1530. The main indices closed the day towards lows of the session with the S&P finishing down 0.83%. The Nasdaq was hit the hardest, finishing down 0.97% as Oracle (ORCL) weighed heavily on the index after reporting disappointing earnings last night.

The market opened lower this morning and the trend remained to the downside throughout the session as economic data failed to impress and Cyprus headlines continued to affect the market. This choppy, back-and-forth action tends to be frustrating for traders, so less is more in this tape as volatility enters the tape.

All sectors closed the day in the red. Financials saw continued weakness today after Tuesday's initial move lower. FedEx (FDX) spiraled lower following yesterday's heavy losses and the transports got hit hard. At this point there are not a lot of compelling chart patterns and perhaps this time some of the faulty signals under the hood could lead to some corrective action.

Apple (AAPL) is flagging in front of the 50-day moving average.

Apple (AAPL) showed relative strength today as it is holding above the break of the descending trendline and flagging in front of the 50-day moving average. The next trigger buy level is above $460.50-461 on volume for a potential move up to $480-485.

Technical damage is adding up in the financials.

Goldman Sachs (GS) closed the day down 3.16% as it saw a firm close below its 50-day moving average. We warned on Tuesday that GS could come under additional pressure after breaking upper level support of $150.50.

Trades in motion.

Hewlett-Packard (HPQ) closed the day down 2.62% after yesterday's 80/20 "Red Dog" Reversal. The entry for that strategy was $23.14 with stops at $23.58. The stock hit our first target of the 8-day moving average in today's session but if it does not bounce from this level it could test the 21-day moving average in the zone of $20.80-21.02.

The fear trade is on as gold shows strength

Gold closed the day up 0.42% and the Gold Miners ETF (GDX) closed up 2.62%. This trade was highlighted on the T3Live.com Virtual Trade Floor (R) today for a potential long set-up out of the lower level pattern above $38. This ETF has shown upside commitment since the March 6th Red Dog Reversal.

*DISCLOSURES: Scott Redler is long AAPL, GDX, DDD, MGM, F, BAC, S, YHOO. AAPL call spread, DDD call spread. Short SPY, HPQ.