Even with Friday's selloff, we just touched the surface of working off overbought market internals leaving the big question of whether with the trend very much intact, and the 2 key indexes S&P 500 (SPY) and NASDAQ (QQQ) holding key support, was that it to the downside? After all, the rally began this year with the familiar fundamental knowledge of European woes and Greek games-not of the Olympian sort. The rotation of who becomes "it" in "tag" as far as sectors and groups are concerned, made both the rally as the year began predictable, as well as Friday's correction beginning with Thursday's weakness in Financials (XLF) and Transportation (IYT) equally predictable.
S&P 500 (SPY) Held the fast moving average and the gap low from last week. Use Friday' high as an area of resistance, or a good place to sigh with relief if penetrates.
Russell 2000 (IWM) Takes 2 days to confirm an island top therefore we have only one and counting. Was clearly the first one to show signs of weakness, but since 81.00 was the August 1st high and place where the next leg up began from on February 1st, watch to see what happens at that level.
NASDQ (QQQ) If there is an index that could totally tank from here after not budging from overbought conditions, this is it. Tank might be a bit dramatic, but the bigger they are...you know the rest. I never like to see the weekly Bollinger band tested with a close beneath. If QQQ do have more downside, where will it stop? Let's see what happens at 61.45 first.
ETFs:
GLD I'm beginning to think the yellow metal has no mind of its own. But, I have had a negative sense about it all along, only with lack of direction, keeping away long or short for now.
XLF (Financials) Did not get the weekly close under 14.55, the number I would have considered trouble. Now, unless it breaks 14.40, would not discount this getting back in the lead since it had been since the end of 2011.
XRT (Retail) Inside day to end the week, with some signs of vitality left unless it breaks and closes under 56.50.
IBB* (Biotechnology) Held 118.67 with Friday's close. Besides the Financials, the first place I would go to re enter from the long side if takes out Friday's high. Subs-R1 119.31.
SMH (Semiconductors) Watching to see what happens at 33.80.
IYT (Transportation) Ended the week with a DOJI. Under 93.00 see 91.00, back above 95.00 could surprise.
XLE (Energy) Held the fast moving average with 72.50 now support to hold or return over 73.26 a good sign.
TBT (Ultrashort 20+ Year Treasury Bonds) Adjusted the stop on Friday to under 19.00, which means still long going into the week. And will watch the 50 DMA and the island bottom to hold.
Longs:
UAL Never cleared R1 which now comes in over 24.03. Then, still looks good to recent high 25.84 and then up to 30.00. Day to Short-term Swing
VMW Over R1 95.18 good sign but must also clear 96.30 last week's high to look good to 104 level. Day to Short Term Swing
COST Inside week and if used the 30 minute opening range with fudge, still long. Like to see it clear R1 84.40 with risk 83.75. Then could see recent highs 86.18 with all time high88.68 made in December. Day to Swing
SFLY In April 2011, this traded up to 54.64, then fell hard. But, after several tests of the 200 weekly moving average, it has held and sits right on the 10 DMA, above the 50 DMA yet below the 70 EMA and 200 DMA. It has to hold Friday's low 26.50 and get through R1 27.51. Some resistance at 29.40 but if that clears could see 37.00 next. Day to Swing
ACE After a big green candle, fell to the 10 DMA now max risk at 72.52. Has 3 days under the FTP at 72.98 and must also clear R1 73.41. Then could go to 76.50 next or beyond. Day to Short-Term Swing
CELG Oversold on 2-Day RSI and has a good line in the sand of support at 71.23 to hold. Wait for R1 to clear at 72.19. Then still needs to get back over the 10 DMA at 73.00, but if does, should go at least to test recent highs at 75.11 with all time high back in 2008 at 77.39. Day to Swing
Honorable Mention: Must Clear: COL (59.31) AMGN (67.56) LEA (45.60 the 200 DMA) LULU (65.62) JWN (51.06) Positive Pivots Opening Range Reversal: BIDU (Watch earnings)
Shorts:
DECK With Friday's gap down, did not do much intraday. Now, cannot clear 85.25 and would look for an Opening Range High Failure. Target 73.00 then could see 52.00. Day to Swing
ANF Been on and off the list. Now must break 44.25 and stay below that level to see 40.25 then lower. Day to Swing
Honorable Mention: ATI WLP CCL NFLX (3 days consolidating so would trade the range break up or down)
Have a great Sunday!