1. The WisdomTree Europe Hedged Equity ETF (HEDJ) has been a great intraday trading vehicle recently. But, for those interested in a slightly higher timeframe perspective, take a look at the level it tested on Tuesday.
Tuesday's decline pushed the HEDJ all the way back to the $60 breakout level, but as you can see, bids arrived right on cue. While I don't expect the stock to V-bounce back toward the high-$60s, I do believe some two-way rotation between Tuesday's low and $63-$64 is likely.
I don't care if we're talking about Greece, China, Puerto Rico or the Federal Reserve. The bottom line is, I don't trust this market. However, for those who want to take a position likely to benefit (more than most) from a Greek resolution, keep an eye on the HEDJ, using Tuesday's $59.33 intraday low as your level of risk.
2. Just as crude oil caught our attention on Monday, Tuesday's continued collapse and subsequent sharp rebounds in many of the Chinese stocks left traders mesmerized. As you flip through the various China-related stocks, pay particular attention to your own trading timeframe. These stocks are making huge percentage point moves. And while some are arguably still in higher timeframe up trends, many should be discarded and ignored.
Names like Baidu (BIDU) and Alibaba Group (BABA), while popular among day traders, don't have strong long-term charts. In fact, if you're buying either of these names for any reason other than you believe them to be dramatically oversold, I'd suggest you take a second look. I wouldn't blame short-term traders for buying these names against Tuesday's intraday lows, but as they rebound toward the eight-day or 50-day exponential moving averages (EMA), I'd be quick to dump them. Keep your risk well defined on these.
Other names, such as Sina Corp (SINA) and 58 Com (WUBA) have moderately better looking charts. Both attracted buyers beneath their 200-day EMAs, and if the China names manage to bounce for more than a few hours, I suspect these two can lead the way higher. Once again though, I'd be darn careful giving them much, if any, wiggle room should they close beneath Tuesday's intraday lows.
3. I don't know anyone that would describe the Consumer Staples Select Sector SPDRs (XLP) as exciting, but they sure did garner some interest on Tuesday. If you want to get long the group on a higher timeframe, consider doing so against a closing stop beneath $47.50. Beneath that level, and I'd be looking to reverse course and short the group.
If it's an individual name or two you favor, consider Wal-Mart (WMT) and Procter & Gamble (PG). This may be too tight a stop for most, but because I remain skeptical about the overall market, my inclination would be to maintain closing (protective) stops beneath an eight-day and/or 21-day EMA on both stocks.
4. Let's keep in mind China is still a mess, Greece remains in shambles, there's lingering uncertainty regarding when the Fed will hike rates and the U.S. dollar is still frustratingly strong. Tuesday's market-wide bullish reversal gives us a reason to enter the day looking to buy dips. It does not, however, gives us a pass to drop our guard, shutter all discipline and hope for the best. Keep an open mind, smaller than usual position sizes and an unwavering grip on your discipline. On that cheery note, good luck trading!
Any trading or volume profile related questions can be posted in the comments section below, emailed to me at firstname.lastname@example.org or posted to my twitter feed @ByrneRWS.