Thursday, December 13th Recap
Today was much expected for those of you that have been following our Closing Bell recap's. If you came in to today and pressed your longs into resistance you had a rough day and hopefully trimmed your losses. If you look back to Wednesday's Closing Bell you'll see our analysis of the broadening formations on the hourly chart (at that time). Check here for the same chart, two days later. You'll see that our second attempt through resistance couldn't quite make it, and a sell-off was quickly in the works. As we said yesterday 143 was a key area to watch for and if we couldn't hold it might be best to back up and re-asses your positions. If you didn't, I'm sure things got a little rough for you.
Now that question brings us into "what happens now." For now, I am in significantly less positions (only NFLX) and waiting for SPY to find a base. Currently I see one of two things happening. For one, we have the idea of a quick and dirty shakeout down to about 140.80. Personally, after seeing todays relatively controlled sell-off, I think we actually see option 2. The other option I see is another down day tomorrow (after a gap up) and a test of the 141.80 area.
Regardless, it is clear that the market "over-bought" scenario coming into Thursday was noticed, and that the sell-off has officially begun. A few stocks look ready to absolutely fall apart - namely PCLN and AAPL (which were TEXTBOOK plays to the downside today), so I think these may be potential easy plays tomorrow.
In conclusion, if you're going to test positions at this point be quick, precise, and disciplined. The market still needs to digest (as we have only retraced 23.6% since the 11/16 reversal. Notice that the 38.2% retracement is the 21-day at 140.70ish. A hold here is STILL bullish, so don't be overly worried just yet.
Now that question brings us into "what happens now." For now, I am in significantly less positions (only NFLX) and waiting for SPY to find a base. Currently I see one of two things happening. For one, we have the idea of a quick and dirty shakeout down to about 140.80. Personally, after seeing todays relatively controlled sell-off, I think we actually see option 2. The other option I see is another down day tomorrow (after a gap up) and a test of the 141.80 area.
Regardless, it is clear that the market "over-bought" scenario coming into Thursday was noticed, and that the sell-off has officially begun. A few stocks look ready to absolutely fall apart - namely PCLN and AAPL (which were TEXTBOOK plays to the downside today), so I think these may be potential easy plays tomorrow.
In conclusion, if you're going to test positions at this point be quick, precise, and disciplined. The market still needs to digest (as we have only retraced 23.6% since the 11/16 reversal. Notice that the 38.2% retracement is the 21-day at 140.70ish. A hold here is STILL bullish, so don't be overly worried just yet.