SPX High Reversal - Trading Biogen (BIIB), Tesla (TSLA) & Amazon (AMZN)
The markets were hit hard Friday closing down (1.25%) on the S&P 500, (2.35%) on the Russell and (2.70%) for the NASDAQ. The NASDAQ decline even out paced small caps which is quite unusual. It was the worst daily for the NASDAQ since 2011.
The markets 'feel' a lot worse than they are actually behaving at this juncture. The coast is not all clear but for now, it simply appears more rotational in nature versus any sort of market panic.
Provided below is our analysis and conclusions on the S&P 500, Biogen (BIIB), Tesla (TSLA) and Amazon (AMZN) after Friday's large declines.
The S&P 500 is still only 1% off the all time high...and remember, that high was set Friday. The subsequent extreme price reversal does not exactly bode well for the short term though. See the chart below.
The S&P 500 has held up well during the recent tech and biotech meltdowns. Selling volume is increasing and the RSI is very neutral at 51. If the selling is not over the S&P is likely to run down to the $1840 price level. This is only another ~1% away.
The Time Bandit Trader newsletter was forced to close its April Biogen (BIIB) put spread Friday. The trade was closed out a pretty decent price considering the stock's volatility Friday and in the past weeks.
The Time Bandit Trader trading process is what has generated our awesome track record. Over the years we have learned not to mess with what works :) Cutting losses early is fundamental to successfully selling credit spreads.
Biogen (BIIB) is dropping like a rock and eliminating our exposure by adhering to our trading process surely saves us from future pain and loss on the trade. Biotech continues to act like a falling knife and has been one of the worst performing sectors of late. The poor sector performance has taken Biogen (BIIB) with it.
Tesla (TSLA) is another vehicle Time Bandit Trader has had success with over the last few months. The recent rotation out of momentum names has taken down Tesla as well.
Tesla (TSLA) made a low last week near the $210 price level then reversing higher. Much of the rally was undone Friday. Last week's low and the bottom of the price gap in February is critical. Giving up this level and testing the $200 price level will force action for the Time Bandit Trader April trade to protect the portfolio.
Amazon (AMZN) was a relative bright spot Friday reversing its move lower on high volume. The stock still closed down but fared well when compared to most other tech stocks on an intra-day trading basis.
Amazon (AMZN) RSI has bottomed out and Friday's volume spike may have been a capitulation day. Only time will tell. Both price gaps have now been filled and it is time for AMZN to get its act together. The stock could get down to the $310 level without shaking our confidence too much. However, much beyond that and action may need to be taken.
The following article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.