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The T3 Morning Market Call: Outside Bearish Reversal Triggers Global Sell-Off


Pullbacks should be welcomed by bulls and bears alike.

Stocks within the high beta tech group have diverged from each other considerably of late, so take a stock specific approach with these.

Apple (NASDAQ:AAPL) was the only stock on my usual high beta tech list that finished in positive territory, continuing its recent inclination to trade inverse to the market. AAPL registered gains of 0.4% yesterday after seeing a nice push into the close. Yesterday's low of $438.22 gave us a new point of reference to watch. Below this we have the 50-day at $435.65. It's hard to know what to expect from AAPL given its recent erratic nature, but it's worth watching after yesterday's show of relative strength.

Google (NASDAQ:GOOG) gave the first warning signal when it saw a push-through failure at $916 last Thursday. Then yesterday the stock filled the gap from the prior Wednesday to the downside with a 2% loss. See if GOOG can hold onto the 21-day at around $868.81.

Amazon (NASDAQ:AMZN) gapped down at the open yesterday and couldn't fill the gap as the stock headed lower by more than 2%. The stock already dipped below the 38.2% Fibonacci retracement level of the recent rally. For it to stay out of trouble, it needs to hold the 50% level at $258. AMZN may not be strongest enough to hold up in today's market storm.

LinkedIn (NYSE:LNKD) retraced 4% yesterday and broke below some key moving averages, including the 50-day yesterday. This one has shown relative weakness since its most recent earnings report, which was a rare disappointment for a company that had made a habit of beating Wall Street expectations. The positive results had made the stock a momentum darling, but I think the narrative has now changed. The $165 level is the last line of defense to keep it out of trouble, but I think if you are looking to add some shorts on today's down open -- which could be tricky -- this is one of the best short set-ups out there.

Netflix (NASDAQ:NFLX) has been showing some signs of exhaustion. The stock saw a big down move yesterday as it retraced 3.6% and broke below its 8-day moving averages. The 21-day is standing at $220.50. Watch to see how far we retrace in NFLX, as it could be another to see some air come out.

When a frothy market finally succumbs to weakness, often times the frothiest sector and stocks are the first to get pummeled. Yesterday we saw that with the solar sector and some of those "high short interest stocks" getting hit hardest. Let's see how that group reacts today.

SolarCity (NASDAQ:SCTY) got hit hard during the market's pullback yesterday. The stock did open higher yesterday, though, so similar to the market, the percentage loss on the day does not tell the whole story about the extreme intraday selling. I think because of the Elon Musk effect, this stock got a bit overheated, and we could see a deeper pullback. After a parabolic move, it gave back almost 50% of the recent gains within two days. If it doesn't hold the 8-day at around $40.54, we could see some more sellers stepping in. Other stocks in the solar sector like SunPower (NASDAQ:SPWR) got hit hard yesterday, too, and should be on the radar today. If they pull in too far, they could also present buying opportunities, so be flexible and obey price action.

Gold (NYSEARCA:GLD) continued its erratic price action yesterday, gapping up but failing to hold its overnight gains. The ETF put in a potent red bar like the market and macro composure remains very bearish. GLD is up around 2% this morning, though, as panic hits global markets, so keep an eye on it.

Overall, on volatile days like this it is best to narrow your focus to a smaller number of stocks and focus more on the indices. In general, I don't think traders have a huge edge when trading broad indices, but today could be a day where you focus more on the SPDR S&P 500 ETF Trust (NYSEARCA:SPY) and a select number of stocks in key sectors you are watching. Cash is also a position, so if you are not comfortable stepping in during extreme volatility, wait for things to settle out.

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Scott Redler is long AAPL, BAC. Short SPY.
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