Off the Charts

The market's focus remains on the fiscal cliff, and without any resolution it would seem hard for us to get any significant bounce. In Friday and Monday's sessions, the market saw heavy pre-market selling that was contained once the session opened. The S&P (SPY) opened slightly positive this morning but was sold-off within the first hour of the day. The S&P closed the day towards the lows of the session, down 0.48%, while the Nasdaq was hit the hardest today, closing down 0.74%. The S&P is trying to hold support of the 50-day moving average that stands at 1413, although the intermediate uptrend that has been supporting this market since the Nov. 16 low gave way today. It will be important to see how the market handles this break. Will the 50-day moving average continue to support the S&P or will deeper support levels be tested? As stated towards the end of last week, now would be a good time to pare down risk as we approach the end of the year, depending on your time frame. December was an unexpected surprise as there were many compelling patterns that triggered and extended higher. Volume was extremely light today, and that could continue through to the new year. Expect action to pick up a little bit once 2013 kicks off. Keep your expectations in check until the ball drops. S&P (SPY) Source: eSignal View Chart » View in New Window » Pressure Continues to Build on Apple Apple (AAPL) closed the day down 1.38% and continues to feel heavy. The key level for AAPL to hold above was $520, and it failed to do so. The break down through that level could signal further weakness is in the cards. This new lower wedge continues to build and a break of $510 could lead to a potential break down through the $501 to $505 area. Apple (AAPL) Source: eSignal View Chart » View in New Window » Trades in Motion Amazon (AMZN) broke out above the $255 to $256 buy pivot last week but failed to break out to new 52-week highs. A high level stop for momentum traders should have been $524 to $525, which was highlighted noted in Scott's 10:30am note. AMZN was pressured to the downside today after disappointing holiday retail numbers were released. Swing traders could have exited their AMZN position for the time being, and aggressive traders may have looked to short the stock. AMZN closed the day down 3.86%, and the next level of support is $246.65. Swing traders that entered this long at the $255 trigger buy price could use that as their stop if they did not honor the high level stop at $254. Amazon (AMZN) Source: eSignal View Chart » View in New Window » Bank of America (BAC) closed the day up 2.58% as it broke out to new yearly highs. BAC has seen an impressive rally this month as it continues to ride support of the 8-day moving average. There were two calculated buy prices for this stock, the first at $10 and the second at $10.70. At this point it is hard to chase after the recent run, but it would be best to stay with some of your long position. Bank of America (BAC) Source: eSignal View Chart » View in New Window » Trades on the Radar Michael Kors (KORS) saw an impulse move lower today after disappointing U.S. holiday retail sales numbers. KORS closed down more than 6% in a generally underperforming retail sector. Today's move could signal further weakness to come in the stock. If the stock held below $52 it would give traders more confidence in a potential short below $49.20 to $49.40. Michael Kors Holdings (KORS) Source: eSignal View Chart » View in New Window » Rackspace Hosting (RAX) first came on the radar when it was showing relative strength to the market, and was listed as a trigger buy above $66.50 on Nov. 26. Since then this stock has traded higher as it broke out to new 52-week highs. This stock is currently consolidating above the recent breakout level of $70 and is on the radar for a continuation move higher above $73.86. Rackspace Hosting (RAX) Source: eSignal View Chart » View in New Window » Toll Brothers (TOL) is trading in an upper level wedge pattern. The apex is beginning to form, suggesting potential trade resolution soon. A move above $33.50 breaks the wedge to the upside but a move below $31 resolves it to the downside. There is a housing number tomorrow at 10 A.M. that should influence this sector. Toll Brothers (TOL) Source: eSignal View Chart » View in New Window » The precious metals experienced some recent selling pressure as they lost support of their key moving averages. iShares Silver Trust (SLV) saw a large gap down on Dec. 20 and it is now consolidating that recent move lower. There is a new range forming in this ETF, and although we would lean to the short side for a continuation move lower below $28.55, a move above $29.33 could relieve some short-term pressure in this stock. iShares Silver Trust (SLV) Source: eSignal View Chart » View in New Window »

Off the Charts

Now's a good time to pare down risk, meanwhile, keep your expectations in check until the ball drops.

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