Last week was tough! We got so close to looking like we were going to breakout to new highs in QQQ only to wind up closing down 1.2% breaking the adaptive moving average, yet holding last week's low. And we did not have yet another Distribution day in volume. SPY is smack in the middle of the range over the last two weeks and actually had an inside day on Friday. Slope on the 50 day moving average on both is still pointing up and for those of you who saw the tweet that Geoff Bysshe wrote to me, the 60 minute chart had a wedge which we closed on the bottom of but did not break. IWM is still holding the 50 day moving average at 82.93, but did close at the lower end of the range. The 50 day moving average is still pointing up. DIA also had an inside day. The slope of the adaptive moving average is neutral in all indexes. I like to use that moving average as a measure of "noise."
The best I can say is that we are still in a bullish trend, still experiencing a lack of commitment from buyers and sellers, the 100 point moves up and down present as noise, all of which is making trading difficult. But, last week we talked about having a strict plan to follow. Once you've made a commitment to a swing trade, turn off the noise, and for those who are doing mini swing and daytrading, control the risk and keep track of stops and profit targets. That is the absolute best any trader can do under the circumstances. Master this discipline now when the market is tough, and I guarantee that you will be ready to take it up a few notches when the market gets easier. The best metaphor I can think of is the training that the Navy SEALs do. One exercise is when their feet are tied and their hands are tied behind their backs. Then, they jump into a pool of water and swim 50 m. Then, they have to dive down to the bottom of the pool still bound and retrieve goggles with their teeth and then swim another 50 m. The point is the preparation is harrowing so they are ready for whatever happens in the field. It's also been an extremely effective way of filtering out recruits as most drop out before training is done. Think of this as we go into next week. By having a consistent plan and learning to control risk now, imagine how smooth the mission will be if you are well prepared for all of the impediments and then there are none!
ETF's SMH although this got dragged down with the market, still held up pretty well and had an inside day last Friday. The close of 36.75 is now the all-time new high close to beat. Swing traders should still be in this, mini swing traders might have gotten out now as per rules of having .5 of an ATR the day of entry and then a no loss stop. Regardless, this still looks like the most promising ETF on the board. Swing traders should continue to use a stop beneath 35.67. For new entries, look to buy either on the dip close to the adaptive moving average 36.08 using the same stop as the swing trading stop, or equally valid is now wait for new highs above 36.97, especially if we can close above 36.75.
FXE broke 141 and went down to 140 which was a big wall of support established during March. The dollar strengthening last Friday had a big impact on the market. Beneath 139.93 there is a gap to 139.63 from March 17. If FXE holds this 140 level, and cannot fill the gap, once again look at the dollar to start to retreat. The Euro just as the metals, have had such a dramatic fall from all time highs, it is hard to believe that they will not have some rebound at some point soon.
GLD** pretty choppy day last Friday, but overall this is still above the 50 day moving average and has the best chance of rallying especially if the dollar weakens. Has now closed three days under the floor trader pivot. That comes in Monday at 145.79. Consider buying a small position above the FTP especially if that corresponds with a five minute or two minute opening range breakout. But really it also needs to clear and close over R1 at 147.09 to sustain the rally. Then I would stay in it for at least a mini swing trade see if we can get back to the all-time high made on May 2 at 153.61. To control risk mini swing traders can use Friday's low 144.49, or the opening range low once it crosses the FTP.
FXI went short last Friday and took off .5 an ATR before covering as I didn't want to go home short for two reasons. One is that the slope on the 50 day moving average is neutral and second because it closed above the prior day's low of 43.10. If this gaps lower, I will look for another opportunity to go short in anticipation that it can go down 41.50. If it comes in higher especially above the 200 day moving average 43.44, then I would consider actually a long position with a stop under Friday's low 43.00.
USO** bought this on Friday, took a tiny loss, and then watched it have an opening range reversal but with a risk more than one third of an ATR so I skipped it. Wound up with an inside day. Now, above today's high 39.61 which will also get it back above R1 at 39.85, would consider a reentry and this time use 39 as a point of risk where the FTP comes in.
Picks: After looking at a lot of different stocks, I'm inclined to continue to watch mainly the indexes and the ETF's for long entries. Not a great field, but the best I could find with short term trading patterns and minimal risk.
DNDN**did give an entry last Friday over the five-minute opening range which corresponded above the FTP. Since it failed to get through a 30 minute opening range, it languished the rest the day so I exited the position but will be watching it again tomorrow. It is extremely close to both the 50 and the 200 day moving averages which converge close to 37.13. If it comes in lower, then I would like to see what happens around today's low 37.72 for a low risk buy against the moving averages. If it comes in above 38.10, it will clear the pivots and above 38.30, the midday congestion that happened once it sold off. Has a lot of overhead resistance beginning with the 10 day moving average at 39.31, but if it can clear 39.80 especially on a closing basis, then we could see a nice pop at least up to the recent high made on May 2 at 43.96 and possibly beyond. Then, if you can close above 44, we're looking at the possibility of a significant rally with all-time highs made on April 30, 2010 at 57.67 Day to swing
ALTR**certainly one of the strong looking stocks on the board. Also bought this on an opening range reversal Friday but scratched for no other reason other than reducing exposure over the long weekend. If it comes in beneath Friday's low 47.98 then would most likely give it some room to establish support since could easily drop all the way down to 43.70 and look good. But, if it comes in around unchanged, then can use today's low 47.98 which corresponds with the 10 day moving average of 48.10 as a low risk buy and if it clears 48.90, especially on a closing basis could see a decent rally up to 53 as a mini swing target. Day to mini.
ACOM**now oversold but still extremely interesting looking on the daily chart. Has four days under the FTP with decent support underneath at 39.11. Wait for it to cross the FTP which comes in at 40.04 tomorrow and can really tighten up the risk using Friday's low at 39.40. Overhead resistance at the 10 day moving average 41.14 but if it closes above that see no reason why this couldn't go on to test recent highs at 45.79 and beyond since that is all time high. Day to swing
SLB**on the weekly chart the 50 crossed over the 200 weekly moving average two weeks ago. On Friday, it was extremely difficult to trade since it had an opening range reversal, a failed opening range breakout, and then sold off to new lows at the end of the day. But, still looking at 80 as an area of support not to mention that usually, when you see major moving averages cross the rally is often not far behind. It's not always the case however, but there is a good percentage chance. It's all about timing the entry and controlling the risk. In this case the low from May 11, 80.83 is the closest risk and 84.05 the number that needs to break above especially on a closing basis to keep one in this long. Overhead resistance at the 50 day moving average 87.86. Can either buy against the recent lows or if it comes in higher, above 84.05 provided the risk is there. Day to mini or swing if you want to trail up stops.
FISV*this could actually turn out to be a long or short since the 10 and the 50 day moving averages are so close together. Had two inside days in a row so it is definitely consolidating before it makes its next move. On the positive side closed above the 10 day moving average which comes in at 61.92. Plus the 10 day moving average is sloping up. It does have overhead resistance beginning with 62.87 the high that was made on May 3 which is the top of the recent area of congestion. But most likely look to buy above Friday's hi 62.47 with a tight risk to under Friday's low 61.69 and wait to see if it can clear 62.97. Otherwise, not my favorite short on the board, so most likely if I see it break Friday's low I will have no position. Day to mini.
DECK**this fell out of favor after earnings. But the 10 has now flipped back above the 50 day moving average and they both come in around 87.67 which corresponds perfectly with Friday's low 87.71. Plus Friday was an inside day. With such a clear risk, would be looking to buy above Friday's hi 90.35 or on an opening range reversal against Friday's low. Regardless, there is a gap to fill up to 94.08 as a first target. On the weekly chart there is better overhead resistance at 96.70. Day to mini
RIMM**this is my wild pick but only for a day trade most likely. Here's what has to happen-after making a significant drop after it gapped lower back in April, it is extremely oversold. But the main reason why I'm focused on this is because the risk is very clear. The last swing low was made last September at 42.53. Friday's low was 43.19. The FTP which I would buy above and use to control risk, comes in at 43.47. That gives you about half an ATR of risk under the swing low from April. On May 10 it did attempt to rally up to 45.68. That would be one objective. But looking at the possibilities if this does get going, 49.85 is the high that was made on April 29, the day it came in much lower. And, I wouldn't dismiss the possibility of it trying to fill the gap up to 52.50. Those of you who followed some of my wild or picks from last week: TZOO, YOKU, and CREE know sometimes I can be one day premature. That is why it's so important to control the risk, get out and follow up again if it follows through the second time. It is the only way to trade these oversold stocks and not get hurt. And when we time them right, the tiny losses become inconsequential since we can catch those sharp momentum rallies. Day trade and maybe mini swing.
Shorts:
XLE**this broke down under the 50 day moving average. The 10 crossed beneath it and it also crossed beneath the 70 day exponential moving average. Essentially, this ETF is holding on to the swing low that was made in March at 72.90 breaking it briefly last Thursday at 72.78 and then closing above it. Overall, the chart looks toppy. There is some support down around 70.80 where the 160 day exponential moving average is, but better support closer to the 200 day moving average at 66.57. If it comes in beneath 72.78, then go short especially since this would be under the FTP at 73.93. If it comes in higher, I would also consider selling it on strength against the overhead resistance by the 10 day moving average now at 75.69. Day to swing.
FXI if it breaks 43.10. Support areas mentioned above.
GOOG had many attempts to try to break above 545, and not only failed to do so, but ended last week at the lowest price it has been in two weeks. The last swing low is at 519, and if that breaks we're looking at support at the 200 weekly moving average at 505 and wouldn't rule out the possibility of a move down to 450. Has had the last three days under the floor trader pivot so a reasonable risk is above that at 531.41. Day to swing
Have a great Sunday!