Gold is making a comeback as a safe-haven investment after feeling heavy over the last two months. New bailouts and inflationary central banking policies have resuscitated the precious metal, which is sharply in the pre-market.
Last week the market suffered two distribution days, giving this powerful new uptrend its first setback. The Indices and most stocks took it in stride, considering the distance that most stocks have traveled from the October 4th lows. We held the 38.2% retracement level, giving us a new point of reference to trade against. This changed the speed of the rally but didn’t derail it! This week is very important. Can we hold last week’s important technical levels? Can we continue to see constructive action with some of the markets leaders?
Traders will be looking to keep it simple and limit risk. If you are going to be long stocks, you should have hedges on with the potentially explosive headlines out of Italy, whose economy dwarfes Greece. This is a very dangerous environment that even the professionals don’t understand completely.
There is Short term micro support in the S&P at 1235, which was tested in the pre-market early this morning. Big Support that held last week was the 1215-1218 area. The more Macro line in the sand is 1185-1195. Resistance sits at 1260-1265 and then 1273.
Watch these three stocks for clues to market direction:
Apple (AAPL) is in a box. A close below $390-393 and tech could be in trouble. Above $409-$410 would be a healthy boost.
Google (GOOG) is still above its earnings gap. A close below $578-580 and this also will weigh down tech, but above $600-603 would be very positive for tech.
Goldman Sachs (GS) can be used as a proxy for banks. A break and close below $100-102 will not be good for that sector.
*DISCLOSURES: Scott Redler is long AAPL, GOOG, X, LVS, JPM. Short SPY.
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