Where will the Chips Fall?

Scott Redler of T3Live.com

Friday’s emotional down open provided a great trading opportunity. The strong big cap tech stocks followed the rules and had a decent bounce off the open (THE RULE–in an emotional down open you ALWAYS look to the strongest group for a potential bounce setup).

• The banks, which have been lagging, did nothing but continue to lag (although now that the news is out, could this be a short-term bottom?) Watch GS and Friday’s low around the $163 area.

• Gold–which has been strong–was a great long opportunity off the open.

• Even oil gave us a trade.

NOW WHAT?

We need to see how the news is dealt with now that the emotional component of the move is over. The next few days will be important! To say the least. As long as we hold the 1,080 area in the S&P, we can still have an end-of-year move through the 1,113 highs–but, no matter what, it will be VERY TRICKY. I’d keep it very light.

Sector Rundown:

• All the upper ranges of big cap tech remain intact–AAPL, GOOG, BIDU, AMZN, PCLN

• Gold still remains strong.

• The agricultural group is holding its newly formed upper range.

• Bank charts remain ugly–but this could be a “sell the rumor, buy the news” type of situation–The Dubai news is out, this will help support the S&P and confuse most traders.

• Oil continues to lag.

• The casinos are not compelling right now.

• One-off stocks like RINO, NLST, and AONE, etc. are starting to pop up, which is what tends to happen into year-end.

We had a big move off of Friday’s low, which could potentially lead to tricky trading today. The market can fill the rest of the open gap from Friday; however, buying Friday’s highs will be tough due to the size of the travel range from the open. Be patient today and let price action establish a tradeable pattern.

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