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Market Eerily Quiet After Christmas

Scott Redler

The market slumped to another loss Wednesday as trading resumed following the Christmas holiday. Stocks sold off for nearly the entire morning after opening slightly higher, but the most notable characteristic about the market was the lack of volume. It appears traders are in no hurry to return from holiday travels, and perhaps are waiting for more definitive word about fiscal cliff negotiations. Weak holiday sales numbers could have played a part in the market's weakness, with the Nasdaq falling the hardest, down 0.75%.

The action was choppy as the S&P broke through the recent floor and is trying to close above it. The level we held in the S&P 500 ETF (SPY) was $141.85-141.95, and we hit $141.35 before rallying a bit off the lows. This is not an attractive tape for traders as we see many divergences. Having high level trailing stops and then lower level hard stops seems to be the best approach right now.

Amazon (AMZN) stood out today from the short side. Perhaps the weak holiday sales numbers weighed on the stock, but in any case the momentum stop or the high level stop we talked about this morning got hit. The stock busted through $254-255 and is finished down 3.9%. The bigger support area of $248 is now important to watch. Momentum players probably left the scene on today's weakness and some might have shorted. I, however, stayed away.

Apple (AAPL) continues to feel decidedly heavy. The stock didn't hold the $518.71 pivot (my stop) and did get as low as $511.12, just above the $510.24 pivot. This stock is dangerously close to the $501-505.50 crucial support area. Take care here if you are an AAPL bull.

Google (GOOG) is trying to hold above $705-707. If it breaks below that area it can see some more pressure.

eBay (EBAY) is trying to hang on to the $50 area. Use some caution here.

Meanwhile, beaten-down stock Baidu (BIDU) had a strong day, breaking above the recent pivot to close the day up 4.8%. The stock has been showing some decent strength since the December 6th reversal, but the macro picture still looks bleak.

Another laggard stock Research in Motion (RIMM) closed the day up 11.5% as traders in our Virtual Trading Floor(R) were all over it today. A quick trade like this is a pleasant surprise in a slow, dreary tape. I would take most off if you caught the move.

The banks are still hanging around, but I didn't add to any of my positions. Bank of America (BAC) is at 52-week highs and I have remained long for weeks since hawking it at the $10 level for a breakout. Trim and trail winning positions in this environment.

Homebuilders are bending a bit, but certainly are not broken. I got stopped out of my position in the Homebuilders ETF (XHB) as it breaks mid-level support, but on a macro basis the sector looks fine.

There is still time to give the gift (to yourself or someone else) of trading education for the holidays. We believe the best investment you will make in 2013 is the one in yourself, and we have trading courses for all types of traders. Take advantage of the $500 credit towards any of our courses.

*DISCLOSURES: Scott Redler is long BAC, WFC, FB, YHOO, TASR, RIMM. Short SPY. Traded but flat HLF, AAPL, XHB