Just when one might think perhaps it's time to become bearish, the signals are still mixed. IWM clearly the weakest lately, closed with a distribution day in volume yes, closed with a confirmed warning phase yes, but, the slope on the 50 day moving average is up! Plus, it held 81.45 the last swing low made April 14. QQQ closed up on the day and maintained a bullish phase, but could not put in an accumulation day in volume. The slope of the 50 day moving average is neutral.
SPY is what I will focus on tomorrow. Although it closed with its sixth day of distribution in volume, it held not only the 50 day moving average, but also the 70 day exponential moving average. If today was indeed the low, that would mean that looking at the last 3 lows from March, April, and today, we could have three higher lows. Although SPY had an opening range reversal, I would've never taken this trade until I see it cross above the FTP. Therefore, the FTP comes in tomorrow at 132.89. If that corresponds with a five minute opening range breakout, I would be inclined to buy for a swing position. The risk is under the exponential moving average or 131.93. The ATR is 1.7 which gives swing traders a reasonable risk. Mini swing traders can use the 50 day moving average at 132.48. The reason why I look at this as a possible swing trade is because even with the pressure the market has experienced, the phase is still intact and the slope of the 50 day moving average is still pointing up. Last time we looked at a swing bottom, we waited for an accumulation day in volume before we got in. It is also a valid concern considering the number of distribution days we've had in this index. So, if we do not get an accumulation day with a good close tomorrow yet it crosses the FTP, trade this for a mini swing trade to see if we can get the momentum to get back up at least to 134.
Other ETF's: another main focus for me tomorrow is SLV. It held S1 and the previous day low. It held the 160 day exponential moving average. The 50 day moving average which is overhead is pointing up. Once again, I will use the FTP 32.81 as my guide as now closed beneath it for two days. Swing traders can use beneath the exponential moving average 31.56 as a risk, mini swing traders can use under the recent low 31.97. So that you understand the difference, this is still in a warning phase so if you're buying it for a swing you're buying it against a major moving average in anticipation that it can cross over the 50 day moving average and go back to a bullish phase. Otherwise, if you're just looking for a move up to the 50 day moving average which comes in around 38, you are looking at this more for a mini swing trade.
It is also important to watch the dollar. FXE closed with a bullish engulfing pattern after crossing beneath then closing above the 70 day exponential moving average at 141.16. It too has overhead resistance at the 50 day moving average but with a positive slope. If it crosses above 142.50, I would anticipate the dollar to drop further. Keep in mind that tomorrow at 2 PM Eastern standard Time, the Fed will be releasing its minutes. Of course that can also create some havoc.
FXI had a bullish engulfing pattern today although it's still trading beneath all of the moving averages and with a slightly negative slope on the 50. But, if we look at this simply for a phase change the first hurdle for it to cross is a close above 43.55 the 200 day moving average. That would at least put it back into a warning phase with the possibility of it moving up to the 50 day moving average overhead at 44.37. With the last three days under the FTP we could at least watch for 43.09 to hold up tomorrow morning and possibly take a half a position using a stop really tight under today's low 42.81.
The ultra-shorts: TWM confirmed a recovery phase crossing the 50 day moving average for two days yet stopping just below the 70 day exponential at 44.37. What prevented me from buying this today even though I saw an opening range reversal early, was that it never got above a confirmed opening range breakout on the 30 minute. So a couple of things for tomorrow. 43.03 which corresponds with today's low is now the support area for a to hold. If it breaks down under there that would be a good sign for the market. 44.07 today's high is the number we have to get through with a confirmation especially on a closing basis over 44.37 which would certainly mean more selling at least in the mid-caps.
SDS closed just shy of its 50 day moving average at 20.99. Above that number I will look to be a buyer which of course also means weakness continuing in the S&P 500.
QID looks very similar in that it stopped just beneath the 50 day moving average at 51.34 another area to watch for. Typically, the ultra-shorts are not the leaders. For that you must watch the indexes. But, so that we are thoroughly prepared regardless of the direction, have the ultra-shorts up on your screen so that you can watch the relationship between them and the indexes.
Picks: I will be watching the indexes and SLV. Most likely, I will keep any activity light ahead of the FOMC results. The rest of the pics continue to be based on the minimal amount of risk from both the long and the short side.
R after the inside day, today it held S1 but never really went anywhere. Now that it has two days under the FTP, we could use this as a point of entry for tomorrow. 54.37 is the FTP which gives us an excellent risk to beneath today's low 54.03. There's a little bull flag forming which will break out over today's high 54.72. Most likely I would only do this for a mini swing trade looking to see what happens at the recent high of 55.67 and perhaps a little beyond. But, if you want to try this for swing use the 10 day moving average at 53.50 because based on the weekly chart, a weekly close above 55 provided the market doesn't crash, could give this some momentum to the upside with the next overhead resistance at 60 an all-time high made in 2008 at 76.64. Day to swing.
LULU by the time this made its move above the FTP, the risk was out of control for a mini swing trade and there was no particular significance to the underlying moving averages as a riskfor a swing since they were never tested. Now, the only way I would trade this would be if it crosses above the 10 day moving average which comes in at 95.79. Then you are looking at a return to a Condition 1. Again, I would recommend this more for a mini swing trade although diehard swing traders can use a stop under the 50 day moving average at 89.70. It's still within the parameters of the swing trading rules for risk. Mini swing traders can use the low of the last 30 minutes of trading today which comes in and 94.22 with a little bit of a fudge factor to under the FTP which comes in at 94.05. Also interesting is that R1 comes in at 95.86 which is just above the 10 day moving average especially if you include the fudge factor. So a perfect scenario would be an opening range breakout that corresponds with that area. Day to mini.
NVLS am keeping this on the list because not only did the 10 day moving average cross above the 50 simple and 70 exponential moving averages, but now we have short-term trading patterns to look at for tomorrow. With two days under the FTP, that number to hold is 35.88. There is a good risk with a stop under the moving averages now at 35.27 for any trading timeframe. Has resistance up at last week's high of 38.40. Above that, we could see a move to 40. Day to mini.
YUM**this had an impressive end of day rally closing back above the 10 day moving average at 54.25. I like this one only for a mini swing trade since the slower moving averages are too far from its current price. Ideally, would like to buy this on retracement back to the 10 day moving average with a stop either under 54 or today's low 53.48. Otherwise, above today's high 54.68 especially if it gaps higher, the 10 day moving average becomes a critical level of support to hold. All-time high was made last week at 55.39. Above that we could see a move close to 60. Day to mini.
ADI**this is a post-earnings trade provided it has a gap higher above the multiyear high that was made in February at 41.66. If that is the case, then I would use a two minute opening range fade or follow. This stock has not traded higher than 41.66 especially on a closing basis since 2004. All-time high was made in 2001 at 53.30. This is certainly one I would consider for a swing trade because we are potentially talking about a multiyear base. But to control risk, use a break of the 10 day moving average which comes in now 40.72. Mini to swing.
DNDN we had our eyes on this today since it's holding all of the moving averages which have converged in about a dollar price range. 36.72 which is today's low is the ultimate risk for a swing trade. But now, although we did clear the FTP, I want to see it get back over the 50 day moving average at 37.65 and close there especially since that is not only above today's high, but corresponds with over R1 at 37.67. Then, although we will continue to have overhead resistance beginning with the 10 day moving average at 38.35, at least I feel that we have cleared two major moving averages and have a shot if the market is firm of seeing this go higher. Right now, the overhead major resistance and target for a mini swing trade is at 43. Day to mini
CMG**this held not only the 50 day moving average but held the 10 day moving average as well. So, this remains in a good condition. Now, it has two days under the FTP which gives us short-term trading patterns. For swing traders, you have the 50 day moving average as a swing low stop at 266.50. For mini swing traders you have the 10 day moving average at 270.85. Tomorrow, the FTP which it needs to clear comes in at 272.67. I noticed that this is up in the after market so let's also keep in eye on R1 which comes in at 277.10. If it gaps above that in the morning, you can use today's high 275.11 as a risk. Day to swing.
A note about some of the big stocks that rallied today such as AAPL, BIDU, SOHU, SINA-they all rallied up to key resistance which is why am not including them on the list. These present as good day trading opportunities, but from a longer-term view today looked more like a short covering rally than a bottom.
One exception is GOOG**that had a bullish engulfing pattern with good volume which could mean a key reversal. And since this was the first one to fall apart, this would be the one I would focus on for follow-through to the upside tomorrow. Interesting is that the 10 day moving average at 533.46 could also be potential resistance but, I would consider buying a dip and hold of 528 with a risk to the FTP that comes in at 525.57 or an opening range reversal depending on where it opens tomorrow. I would be more reluctant to buy it on new highs as the risk could be uncontrollable. But keep that 527 area in mind as well as a good number to trade off of for a day or mini swing trade.
Shorts
NFLX this came near the 50 day moving average today at 230.55. Again, we need flexibility with this as a move above the 10 day moving average at 237 could signal a buy. But, if it fails the 50 day moving average the overall formation looks heavy. I would expect some near-term support at 225 and a good target for a mini swing trade. If it breaks down under that level, we could see this drop as far as 200. Day to mini
SLB I wasn't terribly impressed with the rally in this today so I will keep it on the list of potential shorts with a clear risk over the 10 day moving average and today's high 83.11 or a potential buy if it crosses that. Under 80.83 is a good place to go short with 81.87 a pivotal area and nearby resistance should this come in lower. Overall target at the 200 day moving average at 77.30
CLF had an inside day today and also looks like a possible short especially under recent low 84.03. Again, exercise flexibility since the 10 day moving average is overhead at 87.59 which in a strong market could turn it around to the upside.
DECK ever since this gapped lower on April 29, we have not been able to fill the gap and today it closed under the 10 at 88.70 and just above the 50 day at 87.72. More importantly, it looks like it is starting to roll over. The exponential moving average comes in at 86.30 so I would either sell this against 88.70 the 10 day moving average and a failure or underneath the exponential moving average. It's had two closes under the FTP so also look at that as resistance for tomorrow 88.36. Day to mini.
Note-I will be taking Friday off. You will have an Evening Watch though to follow-just no tweets.
