By the time S&P 500 (SPY) gets to the major support at the 50 Day Moving Average, it will be sufficiently oversold. Unless it breaks the 50 DMA for a couple of days and the slope of that moving average turns negative, it will be oversold in its current bullish phase. Even though the reversal candles at the recent highs have sufficient follow-through to satisfy bears, I would rather be looking for buy opportunities following the intact overall trend. Furthermore, the leading stocks (BIDU AAPL in particular) remain strong. One must note however, that the DOW (DIA) is in an unconfirmed weak warning phase and Russell 2000 (IWM) is in a confirmed warning phase. Tomorrow begins earnings season with Alcoa first up.
S&P 500 (SPY) Aside until we see digestion or a test and hold of the 50 DMA
NASDAQ 100 (QQQ) Still looks heavy from the recent double tops, but also holding key support areas. Subs: 67.76 if holds good sign, otherwise, beneath more trouble ahead a safe assumption
ETFS:
XLF (Financials) 15.00 pretty big number with oversold conditions on daily relative strength indexes
IBB (Biotechnology) Been a leading sector that has room to the 50 DMA and not yet oversold.
SMH (Semiconductors) Back above 34.70 would be encouraging but now under the 50 DMA
XRT (Retail) Like to see this test and hold the 50 DMA and show oversold daily indicators to boot
IYT (Transportation) Interestingly, last week's low held at 92.09 for now
IYR (Real Estate) If the positive monthly trend holds on, that will sure help the overall market
OIH (Oil Services) Approaching oversold with yet another hammer candle
TBT (Ultrashort Lehman 20+ Year Treasuries)Hard to believe rates can go lower, but with the ugly gap down, the 50 DMA now resistance
Longs: On categories: Gap higher days we go to all categories and choose ones with lowest risk that break the opening range. On weaker days, we look at Category 3, especially if the picks hold S1, previous day lows or a major moving average and have a good risk on the reversal. The difference between Category 1 and 2 is the stock condition-a Condition 1 is strongest stock and more likely to make a parabolic move.
NOTE: Today was a perfect example of Category 3 stocks holding S1 and giving traders the best opportunities
Category 1: (Aloha) Positive Phase, Condition 1, 2 days under the FTPs, Risk to Previous Day low, Can buy ½ over FTP and ½ over R1, Target- Day to at least 3 ATRs from entry:
ESRX 3 days under the FTP. 10 DMA at 55.13 to hold and should clear R1 56.70
Category 2: (Pipeline) Positive Phase, Condition 2-3, 2 days under the FTPs, Risk to Previous day low, Can buy ½ over FTP and ½ over R1, Target- Day to at least 3 ATRs from entry:
DLR 4 days under the FTP, must hold 72.90 clear 73.68
Category 3: (Double Up) Positive Phase, Condition 1 through 4, Positive Pivots which means candidate for Opening Range Reversal, Risk S1 or previous day low, whichever is lower unless noted differently, Target- Day to at least 3 ATRs from entry:
BIDU Prefer a reversal against 147.95 level
FOSL Prefer a reversal against 137.40 level
JAZZ Prefer a reversal against 49.45 level
PAY Prefer a reversal against 52.75 level
Category 4: (Rip Tide) Oversold (2 or more days under FTP), Condition 1-4, Needs to clear R1, Risk previous day low unless noted differently, Target- Day to at least 3 ATRs from entry:
IBM 4 days under the FTP. Like to see 204.50 hold
JPM (Check earnings) Must hold 43.75 and clear 44.43
C Must hold today's low and clear 34.30
COP 4 days under pivots, must hold 75.00 and clear 75.50
COST 4 days under the pivots, must hold today's low and clear 88.34 R1
GOOG Negative pivots. Clearing today's high also clears R1-earnings 4/12
XEC (Not a condition) oversold and on the 200 DMA at 69.57 must hold and clear 71.20 WLL as well
Some oversold possible slingshot patterns (new 60 day lows, closed on intraday highs) that have monthly charts intact: APA CAT WLT AGCO
Shorts: Lots oversold
COG Negative pivots at 31.35 cannot clear 31.67 recent swing low 30.25
NSC Should break today's low and not clear today's high
DECK neutral to positive pivots so should break today's low and not clear today's high
SINA Should break today's low and not clear today's high
Goodnight!