Indexes sold off hard after the Fed announcement Wednesday. The S&P 500 lost nearly 3%, after meeting 50 day resistance yesterday. The Nazz lost 2% today, and both indexes lost ground in higher volume for the second consecutive day. No sector was immune from the carnage today as even gold took a hit. Material and machinery stocks are practically forecasting certain recession. CLF down 13%, FCX JOYG BTU all down 7%. CAT BHP both lower by 5%. The recent correlations between energy and the market have been telling. As goes the price of crude, brent specifically, the market follows the direction. With the likes of BHI NOV down 6% today, HAL 8%, DVN 5%, the markets future moves are dire. Rails, another important economic harbinger, were derailed, pun intended today. CSX NSC both down 8%, UNP 6%. Bank stocks withdrew substantial gains today, with MS down 9%, JPM 6%, GS 5%. One of the last arguments that recession naysayers have been shouting was no recession ever occurred with a positive yield curve. Well the Fed took care of that today with Operation Twist. The SDS rose more than 6% today, and the VXX 5%. "When the facts change, I change my mind. What do you do sir?", the famous quote uttered by Keynes, the famous British economist, applies to todays action. It is prudent to keep position sizes small, and err on the side of bearishness. Perhaps you can take a shot and buy an NEM near 66.50, after its recent all time high. Defensive breakouts can be bought as these stocks retreat back to the exact buy point. They include WPI 68.74, in its cup with handle breakout. COST 83.55 , in its double bottom buy point. Just a contrarian point of view. BBBY was up 2% after hours on an earnings beat. Thursday NKE TIBX report after the close and FDX before the bell.
Stocks near 200 day support are AEM 67.25, AN 33.75, EBAY 31, M 25.75, JWN 45, ABV 30.15, PM 65, EP 17.95, ARBA 29.60, INTC 21.45. CVX BAX GILD all found 200 day support today. Stocks that can be shorted as they lose their 200 day MAs and their sell stop spots are DSW 43.50, HFC 29. Stocks that lost 200 day support were TGT IFF CHK MTZ ACN ADP VIAB PX VPHM. SWN can be bought with a buy stop of 40.25, as it takes out 200 day resistance. Stocks that met 200 day resistance today were SINA SWN VMW MCO CBS NDAQ HS.
Stocks near 50 day support are KO 68.55, MCD 87.10, ARMH 27, ARCO 24.65, CHD 41.95, FE 43.15. TIF IBM IT ADI KLAC all found 50 day support today.
Stocks that can be shorted as they lose 50 day support and their sell stop spots are PAAS 31.50, LULU 56. Stocks that lost 50 day support today were IPI COH CROX NKE ANF ANN DSW M EP SM RIG WYNN USB QCOM ADP PX AET WCN IP JBL NVLS. Stocks that can be shorted at 50 day resistance are BIDU 145, ANN 24. Stocks that met 50 day resistance today were ALTR LRCX TXN GNC ACN NLSN PAYX MCK DHR WAT CMI DE GOOG RAX PM TPX CVI CXO EXPE.
Good luck.
The author owns CBOE. We sold SDS for a decent profit today, but not quite enough.
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