When a trader first realizes he is wrong, that it that is time to clear out, take his losses, study the record to determine the cause of the error, and await the next big opportunity. – Jesse Livermore
U.S. market has stalled out after its huge run-up from the mid-November low occurred ten session ago when SPY bounced hard with an outside reversal bar from its capitulation low of 134.7 where is its fib 61.8% fib retracement level.
After a wild bullish reversal session last Wednesday, SPY finally had a follow-through and broke out its flag with closing price at 142.16 near its 50-day SMA. The price action for last two sessions was whipsawing and also strongly reacted to the fiscal cliff news while the rotation played a big role to support the market so far.
A few old leaders GOOG, AMZN, PCLN, AAPL continued to dominate the powerful bounce along with some forgotten dogs such as RIMM, GMCR, FB, NFLX.
Meanwhile, some thin-traded leaders with short bases were looking shaky, such as DDD, SSYS, GNRC, CVLT when they pulled back hard after ripping to their year highs with some wide-loose charts, not typical ideal action to see. You can almost sense the end-of-month window dressing action.
On the negative side, Personal income and spending data for October were weaker than expected. Retailer sales were mostly weaker than estimated as we saw the bearish reversal action in M. TIF, YUM, etc. Additionally, the U.S. fiscal cliff issue persisted.
After huge upside moves have been made for many stocks we follow and for the broad market, I won’t be surprised to see some consolidation or decent pullback before further upside move continues.
I’ll watch those resistance levels for those stocks:
SPY near 143; GOOG resistance area 700-705; AAPL 590-600, AMZN 250-255; PCLN 665-675. Any rejection from these level on heavy volume could spell some trouble.
Lastly, always be flexible and protect gain without chasing high flyers which were too over extended.
Thanks for viewing and trade safe and well!
There is a REGN chart posted earlier on Stockstwits: http://stks.co/lFj6
SPY daily chart with note or you can click here: http://stks.co/mFgp