Today I was grateful for WTW. Although we have had some really good trades lately, they have been mostly mini swing trades. Today's trade was one of those rare occurrences of late where we comfortably bought strength, did not have a moment of pain, and even reached our first mini swing target before closing beyond that point up 3.06%!
SPY closed well and above the adaptive moving average but still cannot give us an Accumulation day in volume. I would also like to reiterate that two days ago SPY tested not only the 50 day moving average but also the bottom of a ascending channel. If we remove volume from the equation, then we can look at this as good follow-through off of the key reference points confirmed with a close above the adaptive moving average today. The price point is now 1/3 into the channel with a lot more room to the upside. At this moment in time, the top of the channel comes in at 140. If I isolate all other factors and just look at how prices move through channels, it looks bullish.
Here's what I saw on twitter "Pessimism Among Individual Investors Hits 9-Month High." And that is with all the indexes off their 52-week highs by 2%. The last time sentiment was this bad was in August of 2010, right before one of the most profitable times we've had in a while catching the huge move from September until December. Of course, QE2 had a lot to do with that. I interpret this recent downturn of sentiment as good news and bad news. The bad news is that we are experiencing unsustainable rallies and choppy market conditions with extremely light volume. The good news is that we are only 2% off from 52-week highs which means it's very possible that investors might do what they typically do-after being the first ones to get out will now be the last ones to get in. With just a slight calibration of sentiment and psychology this market could really get moving.
This doesn't change a thing concerning my recommendation of keeping it light, selling into rallies and looking for buy opportunities with minimal risk, but since psychology is such a huge part of trading, it is interesting nonetheless.
QQQ traded just beneath the adaptive moving average and failed to get through 30 minute opening range. Volume was light.
IWM confirmed back into a bullish phase. A move and close above 84.31 will look pretty compelling in the mid-caps. Therefore at this point in time, unless something dramatically changes tomorrow, it could be getting close to party time.
Other ETF's: SMH** had a DOJI day closing right above the adaptive moving average at 36.08. Although the daily chart is a bit sloppy, 36.13 the open and closing price now becomes pivotal and provided we hold S1 which comes in tomorrow at 35.84, I would anticipate that a move above R1 which comes in at 36.31 should get the semiconductors going. And of course, a close above 36.75 will be a new all time closing high.
GLD** I did not buy the opening range reversalbecause it was beneath the floor trader pivot. But now, considering we closed with a bullish engulfing pattern to yesterday's DOJI day, I would be looking for an entry tomorrow. The 10 day moving average is close by at 146.07 which is just above R1 and not a bad place to buy should this open stronger. Otherwise, around 145.05 where S1 comes in and use the floor trader pivot at 145.40 as pivotal. The adaptive moving average is up at 147.93. Based on the overall chart formation though, I do not anticipate it being very much resistance if it gets going.
SLV**I exited the position today more from of a lack of patience then because of a technical failure. Technically, the stop should have been under prior day's low which it never violated. In fact, had an inside day. Now the last two days range becomes clarifying and critical. Above 34.69 I would follow it to the upside and beneath 33.68 to the downside.
FXE today this went right up to the 50 day moving average and closed beneath it. A gap above 142.71 today's high will certainly weaken the dollar further.
What does look different than the last rally we've had in the indexes is the oil service and energy ETF's-OIH and XLE. They are both in warning phases and both with downward sloping 50 day moving averages. They also both tried to rally above the adaptive moving average and have been unable to do so. Therefore, logic dictates that if the market strengthens look to the groups and sectors that are performing well such as semiconductors, retail, biotechnology. And if the market weakens, look to the oil, energy, and industrial metals to go short.
Also, FAZ** is still holding the 50 day moving average at 41.04 and now has three days under the floor trader pivot which comes in tomorrow at 41.80. That will give it a low risk buy against S1 to 41.32 or the 50 day moving average. Another place to go if the market weakens as the financials are also a lagging sector.
Picks: Although some recent pics have done well such as CMG, MA, what is troubling is that I am finding it difficult to come up with good recommendations for new entries right now as I either see a lot of stocks extended or so many others broken down without any discernible reason to get long other than the fact that they're cheap which you know is a strategy I avoid until I see logical short-term trading patterns or support at significant moving averages. Therefore, for tomorrow focus mainly on the ETF's and the indexes until we get better setups.
WYNN* after spending three days under the floor trader pivot, yesterday it rallied above and closed strong. Today, it didn't do very much except hold the 10 day moving average at 145.78 with its low of 146.03. And it never took out the 30 minute opening range which corresponded perfectly with R1. The overall chart formation looks good with a lot of upside potential. S1 corresponds well with the 10 day moving average so that is not only a good manageable risk for tomorrow, but gives us a place to look at for buying against on an opening range reversal. The floor trader pivot comes in at 147.22 which is a good midpoint and first area of support to look at. And today's high 148.62 is not terribly significant as resistance with better resistance overhead near 150. Naturally I would prefer to buy this on a pullback, but if the market is extremely strong and volume comes in provided the risk is manageable, you could look at this one on strength as well. Day to mini.
APKT*this is another one that was starting to look vulnerable just a couple of days ago, but yesterday after four days under the floor trader pivot, opened above and kept on going. The 10 day moving average, which it closed just above today, comes in at 77.49. A better risk for tomorrow to buy against is S1 at 76.68. There is a trendline coming down from all time high that was made on April 29 which crosses above today's high at 78.70. Overhead resistance at 81.15 with all time high at 84.50. Again, would rather buy a pullback but if you do wind up buying this on strength, would most likely recommend a mini swing trade with projected target up to about 86 based on the weekly chart. Day to mini
CF**tomorrow, S1 is at 138.66 which lines up well with today's low 138.79 a good thing because recommending anything that is already strong has to present with a manageable tight risk since we've been in such a period of volatility. Today this had a DOJI day. The floor trader pivot comes in at 141.55 so you can use that area with an opening range breakout to buy above with the risk mentioned for a mini swing trade. Daytraders can use the low of the last half an hour at 140.65. And if this can close above 143.58 it will also be the highest close it's had since February when it made all time highs at 153.83. Starting to look a little bit overbought so again, look at this more for a day to mini swing trade.
GOOG had two day trades in this today, buying a two minute opening range breakout and selling it at the 30 minute opening range and buying it on the opening range reversal taking small profits both times. Most encouraging thing about the daily chart is that it held yesterday's high. Today's low was 529.72 and yesterday's high was 530.33. If it breaks beneath today's low, let's not forget that we still are looking at a death cross. Otherwise, the 10 day moving average comes in at 532.56 and the floor trader pivot is at 532.50. If it opens above those areas, once again can try the same thing looking at a two minute opening range breakout for a move up to about 535 or the 30 minute opening range whichever comes first. However this time, if it stays strong perhaps keep a little bit on because we could continue on up to that overhead resistance at 545 especially if the market cooperates. Day to mini
EQT**had an inside day today, closed just beneath the floor trader pivot and the 10 day moving average. The 10 day moving average is at 50.66 and the FTP is the 50.64. That means that an open above that area with an opening range breakout presents a good risk down to S1 or 50.15. On the weekly chart has overhead resistance at 52.20 and then again at the May 6 high at 53.47. Above that level the next resistance is at 55. Day to mini.
D**last week this made multiyear highs at 48.34 a price not seen since 2008. All time high was made in 2007 and 49.35 not too far away. Yesterday's low was 47.75 a good near-term risk for either a day or mini swing trade depending on entry. The floor trader pivot comes in at 48.09 but most likely would wait for it to cross above R1 at 48.32 and stay with this if it closes above there. Not much of a day trader so would look to this for a mini or swing trade.