Clearly, I was one day too soon in my prediction of the rally for the market. But most important, I detached myself from yesterday and started with a new plan to focus on AAPL and REE, which of all my picks seemed the most obvious as far as risk/reward. Then, as the day progressed I was able to look around and see how some of the other recent picks were setting up. By the end of the day, I made back everything plus that I had lost yesterday. This is why I cannot stress enough how important it is to not focus on small losses. Remember the marble game? You can lose $1.00 six times in a row and then make $2.00 four times in a row and be ahead of the game. It is not how often you lose but how well you control the losses and let the profits run.
SPY guess what today was? An accumulation day in volume. But before I would jump in and load up, let's look at some other indications. SPY rallied a bit beyond the 50 day moving average and settled beneath. However, it did settle above the 70 day exponential moving average at 132.12. Therefore, let's use 132 as a pivotal area to hold with a move back above 132.78 a better indication that this rally can sustain. One accumulation day is not enough, but at least it is a start.
QQQ also had an accumulation day but never got close to either the 70 EMA or the 50 DMA. In today's live coaching Keith showed you the VIX. Although it bounced from its lows, it must hold 16.50 area and work its way back up to the 200 day moving average at 19.43. Today it closed at 17.07.
IWM also had an accumulation day and after a bearish engulfing pattern yesterday, today followed with a bullish engulfing pattern. The wick stopped just at the 70 day exponential moving average at 82.23. I would like to see it hold 82, take out today's high and then look at what happens if it can indeed rally up to the 50 day moving average at 83.16.
DIA did not have an accumulation day in volume and that typically has been the strongest of the indexes. Therefore, I will continue to focus on this index. Needs to close above 123.90 where the 50 day moving average is and then we will see what happens at 124.50 where the gap low remains from May 20. In all four indexes, the MACD has not indicated any shift in momentum, therefore I am still cautious.
Other ETF's: I got into REE today for swing although I will adjust my stop tomorrow after an inside day and a close just on the 160 day exponential moving average. I'll use the 30 minute opening range low in conjunction with 11.22 yesterdays low. If it can get through the 10 day moving average of 11.62 I would even consider adding to the long position.
As expected, IYR held the 50 and closed well. As did IBB and XRT.
SMH has some catching up to do and is an extremely important participant for a sustained rally. It closed just on the 50 day moving average like a slide into third with the bases full. Now, the next batter must hit over 35.15 for the grand slam or with 2 outs, all on base will return to the dugout and wait for the next inning.
Also interesting FXI which closed just beneath the 200 day moving average. Would like to see a couple of closes above 43.50 which will give swing traders an opportunity to get long against the last swing low 42.68.
We also talked about XLF. Must clear 15.56 on a closing basis and then that too will give you a good swing entry with a risk to under its last swing low 15.39. But more importantly, will add another necessary component to any sustained rally.
SLV closed above the adaptive moving average and now look to see what happens at the 50 day at 38.11. Those of you who are long should be using trailing stops.
GLD was not as strong. Like to see it put in a couple of days of short-term trading patterns before I would consider a new entry.
The bottom line is that we are better than where we were Monday, but still not out of the woods since I anticipated some sort of rally and happy about the volume that came along with it, but with other conflicting signals, especially in the financials and semiconductors, keeping a defensive posture. The ultra-shorts: QID held both the 50 and the 70 day moving averages. SDS still has not cleared the 70 exponential at 21.22 but is close. TWM is holding the 50 but closed beneath the 70 day exponential moving average. The 10 day is beginning to cross above the 50.
One bit of good news is that XLE had a bullish engulfing pattern and the slope of the 50 day moving average turned slightly up. OIH had a stronger rally, but still has a negative slope.
And FXE is holding the 140 area. This is still very much an anything can happen market. And just to add one more layer, we are heading into a long weekend.
Picks: couple of good follow-through movers today CMG, DNDN, AAPL, and NFLX which was not on the list, but had a big rally because of rumors that they are merging with Facebook. Also noteworthy from Sunday TSLA which I lost track of but was classic with three days under the floor trader pivot, holding key moving averages and then rocketing today closing up 8%.
COH had a bullish engulfing pattern today with a sizable wall of support at 58. Recent high was made on May 13 at 61.44. At this point, would want to see that clear and then can anticipate a move up to 65. Can either use 58 for swing stop or if it makes new highs, 59.90 where the 10 day moving average is. Similar looking chart is TIF. Day to mini. A note about the retail sector-GES up 15% after the close on strong earnings.
AMZN** now oversold and holding a wall of support around 191. Although this is beneath the 10 day moving average it is still well above the 50 DMA and the 70 EMA. Also has four days under the floor trader pivot which means we can enter with a good risk above the FTP at 192.60 using that 191 area. The 10 day moving average is at 197.22 which is minor resistance. If closes above that, see no reason why this couldn't go back to test recent highs at 206.39 and possibly beyond. Day to swing
FL**after the big move up on May 20, it now has three days under the floor trader pivot. The FTP comes in tomorrow at 24.58. Would buy above the FTP and use the low from May 20 at 24.27 as a risk for a mini swing trade. Swing traders would have to use a move beneath the 10 day moving averages 23.18. Day to swing.
APKT had an inside day today and is holding onto the 70 EMA at 72.07 and the 50 DMA at 73.84. If it breaks beneath 70.65 would not want to be long. And I wouldn't even risk that much. I'd like to see it hold the floor trader pivot at 73.35 for a really tight risk. Must clear today's high 74.72 with some overhead resistance at 75.80 the 10 day moving average. However if this can get going and close above 76.75, it breaks out of a wedge and could go back up to test all time high at 84.50. Day to mini
BBBB although this closed up on the day, it underperformed the market. But since the big move up on April 19 to 50.26 followed by the huge selloff, today it touched and held the 70 EMA at 41.48 with the 50 DMA and 41.28. With the risk so clear and an inside day today, willing to look at it again tomorrow if it comes is lower and holds the moving averages or above the FTP at 42.06 with a tighter stop to today's low. Now, it must clear R1 that 42.62 to keep you in. Day to mini
LULU**held previous day low, came back over the FTP, had an opening range breakout, but could not follow through. One clue was that it could not quite get two consecutive one minute closes above R1. Now, if it comes in and holds 97.22 where the FTP is and can get an opening range breakout and rally above R1 at 98.63, we could see some great follow-through to the upside especially if it closes up there. Then we are looking at a projected move up to around 106. Day to swing.
NVLS**got into this one today on the opening range breakout, but to stay consistent with my mini swing rules, did not take it home because it could not close above the FTP which it now has three days beneath. But, I still like the overall chart formation since it held the 50 DMA and the 70 EMA. Provided it holds 35.57 where the FTP is tomorrow, would look to reenter with a stop under today's low 35.11. Then, if it can get through 36 we are looking at the 10 day moving average at 36.32 but beyond that a move up to recent highs at 38.40. For those who want to stick around for a swing trade, using a stop under today's low will give you the opportunity to see if this can continue the move up to and beyond the all-time high made in May at 41.82. Day to swing.
ACOM technically today was the day to buy this once it cleared over the FTP. Since the volume was light and it could not get above previous day high at 39.27 with any momentum, I will look at this again tomorrow. Now I would like to see it hold the FTP at 38.54. However, will watch how this opens tomorrow for an entry in anticipation that it can take out the 10 day moving average at 39.55 it'll continue up to the all-time high made in April 45.79. Day to swing.
Shorts: Besides watching the ultra-shorts, here are couple of choices that look vulnerable if the market sells off.
ARW**had an inside day today and closed in between the 50 DMA and the 70 EMA. A break beneath 41.98 and we could see this selloff as far down as the 160 EMA at 38.15. On the other hand, it opens up above today's high of 43.23 it is also possible will see a rally up to 45.
INTU**similar formation with an inside day and a close beneath both the 50 DMA but above 70 EMA. A break under 52.54 and we could see a move down to 50.
PNC again, if the market sells off all of the work that was done since February could look like a massive top. This already broke down beneath the 50 DMA and 70 EMA, the 10 is now crossing beneath both. It is resting on the 160 EMA and a break beneath 60.34 we could see some minor support at the 200 DMA 58.69 but if this market really dumps, I would anticipate it going down to the swing low from last August the 49.43.
GOOG**still looking to short under today's low 517.33. Confirmation under yesterdays low 513.40. In a weak market still see this heading down to the 200 weekly moving averages 505. Day to mini.
OII**had an inside day today closing just beneath the 10 day moving average at 79.75 with today's high 79.86. Is still trading beneath the 70 EMA and the 50 DMA, which means looking more for a short covering rally then a bullish daily pattern. But, if the market gets weak and this breaks beneath 76.30, the daily chart could even look like a head and shoulders top with a huge projected move down. Only a close above the 50 day moving average now at 84.02 would negate that pattern.
Also watch SOHU if it breaks beneath 78.
NOTE: I announced during today's live coaching that I will be out of town next week. You will receive an Evening Watch for Tuesday and then again for Monday June 6th when I return. Geoff will be sending you a link to his Daytrading with Hotscans service as a substitute. Please take advantage of Geoff's expertise and caring guidance.
Goodnight!
