Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Minyanville's T3 Daily Recap: Bears Finally Get Their Day


Many traders took this as a day to take notice, lighten up on longs, and potentially add to hedges or short exposure.

The Minyanville - T3Live Daily Recap is brought to you by is an online financial media network and education platform that provides active traders and investors with market analysis, real-time access to strategies, and in-depth training from real traders, real-time©. Learn more.

The trend is your friend, until it's not, and today investors and the trend had their biggest spat of the year to date. The market trended lower for most of the day, but the real damage came following the 2:00 p.m. ET Fed minutes, which revealed the most hawkish comments by FOMC governors in years. The S&P (INDEXSP:.INX) finished down 1.24%, closing on its lows below the 8-day moving average, while the Nasdaq (INDEXNASDAQ:.IXIC) fell even harder, shedding 1.54%

Yesterday, despite the S&P closing at new multi-year highs, we noted some signs of trouble under the hood. The Homebuilders (NYSEARCA:XHB), in particular, broke down yesterday morning, and although they were able to pare losses into the close the daily bar felt like it could lead to more weakness. This morning, after weak earnings from Toll Brothers (NYSE:TOL), we got major follow-through to the downside in the ETF. The XHB finished the day down 4.45%, closing well below its 8- and 21-day moving averages and just above its 50-day moving average. With the potent sell-off, the ETF isn't far from the top of its New Year's earnings gap up.

There were no signs of weakness yesterday from the financials, and today's sell-off wasn't nearly as sharp as the XHB, but the Financial Sector ETF (NYSEARCA:XLF) closed on its lows below the 8-day moving average for the first time this year. We have talked about using the 8-day moving average as a roadmap for the market and leading sectors, and a break of that indicator represents a time for more caution. The financials have been crucial to the market rally this year in the absence of leadership from tech, and further weakening from the group could be too much for the market to bear.

Now that the Fed minutes are out, we may know why gold (NYSEARCA:GLD) resolved its descending wedge pattern to the downside. The precious metals have been selling off hard over the past two weeks, much to the chagrin of gold bugs looking for "currency wars" to reignite the faltering group. Today, though, the damage grew much more significant. GLD opened sharply lower heading into the Fed minutes, and when they struck a more hawkish tone than we have heard in years, it was "look out below!" for GLD. The ETF closed the day down 2.5%, and looks like it could test major support around the $148-150 area.

Overall, many traders took this as a day to take notice, lighten up on longs, and potentially add to hedges or short exposure. Many have been trying to time this type of pullback for weeks and have gotten run over. I will always tend towards following the trend rather than trying to pick tops and bottoms, because I believe over the long term that approach gives you the best odds for success.

Check out's Virtual Trading Floor to follow these traders and their live portfolios on real-time throughout the day! Take a free trial.
Scott Redler is long VZ, FB, GE, BAC. Short SPY.
Featured Videos