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The T3 Morning Market Call: Overheated Market Could Use a Cooldown


Oil continues to move higher and the metals are still trying to build lower support.

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World market are mixed this morning, with Europe down small and China actually bouncing around 2% after some very weak export data. You can interpret that bounce in a couple of ways: 1) the weak data has people expecting intervention from the PBOC, or 2) very bad data was already priced in, so it is a relief for the market to finally just have it out there.

S&P futures are down small after a big four-day move off June lows of 1560ish. At this stage, some digestion would be nice as our markets are a bit short term overbought. The S&P (INDEXSP:.INX) has some upper-level support at 1644-1642. If we can hold above this area, the pace of the bounce could remain intact. The 1634-1632 level is bigger support with the 50-day moving average down at 1627. Pivot resistance is 1654ish, then there are some resistance points at 1661, 1669, 1674, and intraday highs at 1687.

Recently there's been a lot to like for the bulls. The Russell 2000 (INDEXRUSSELL:RUT) is at new highs and the Nasdaq (INDEXNASDAQ:.IXIC) is at 12-year highs. We have seen some catch-up moves by laggard groups like the OIHs, XHBs and MOOs. I know volume has been somewhat low, but it's been that way for a while and -- it's the summer. There is movement, even if most of the movement in the S&P has been overnight. A softer/flat open is welcome sight now.

High beta tech takes turns with opportunity.

AAPL has a really nice setup. It had a nice move off the lows and just digested for a four sessions, creating a potential Bull Flag continuation pattern. A new buy area stands at $423.50-$425. A close above this level opens the door for a potential move back to $434. So far the "Red Dog Reversal" at $393 has worked well. For this to maintain momentum, it could hold $415-417ish.

GOOG is still best-of-breed, but needs to do some work above $897 before it can go again, in my opinion.

AMZN provided us with two nice pivot action areas: $272 then $285ish. Now it's above $290 and still looks good.

NFLX was the subject of Marc Sperling's Trade of the Week newsletter on Monday. The trade idea triggered with two nice buy entries at $228 and $235. Now it's at 2013 highs. It's hard to chase here, but looks good.

YHOO woke up again yesterday and looks like it could be ready for 2013 highs again. A trade through and close above $26.70 could help that cause.

MSFT's pattern is trying to tighten again. I'm not sure if it can get momentum again, but if it does, it will need to trade through and close above $34.60.

LNKD could be worth a look to buy the dip around $186.26ish.

FB has seen a nice two-day move and closed above its 50-day MA for the first time in a while. It still has some room to the upside.

Oil continues to move higher. Some names in the XLE and OIH have started to move better. OIH just had a four-day move and could use a rest as it's a bit extended, but this move put some names back in play like BHI, SLB, HAL, ESV, XOM, CVX .

The ags also have been bouncing back since we profiled them last Wednesday. Jill Malandrino from theStreet's OptionsProfits stated this is their "time of year," and so far that has been timely. MOO broke above $51.45 and filled a gap from 6/20. It has some room to bigger resistance at $53.25-53.50.

The metals continue to try to build lower support.

GLD, if it can get and stay above $121.77, perhaps could make a move up to $124ish over a little time.

SLV also held above the 6/27 low and could work a bit higher. Above $19-$19.19 I could potentially look for a cash flow trade up to 19.45 or even $20+ .

FOMC minutes are at 2:00 p.m. ET so be aware that they could create some volatility, especially in the TLT/TBT bond ETFs. TBT is trying to hold its gap with support at $74.64ish.

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Scott J. Redler is long AAPL, BAC, FB, TBT, XHB, AAPL calls. Short SPY.

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