We have had some really good picks lately: CMG, AMZN, ACOM, COH, ANF, DNDN, POT as well as tracking the ETF's that were ready to breakout such as XRT, IYR and even SMH, FXI and XLF. I don't bring this up to gloat. Rather, to create a paper trail by having you go back to the evening watches, review the recommendations and parameters and then study the charts especially if you can find the tweets that correspond so that you can gain a greater understanding of why these were recommended, how we timed the entries and what the risks and targets were. You can search for tweets by using the "filter this column" bar on tweetdeck. This might be a beneficial exercise for you to do next week since as you know, I will be on vacation yet leaving you in the very capable hands of Geoff.
SPY posted the second accumulation day in a row closing back above the 50 day moving average at 132.91. Today's high was 133.24 which leaves just a tiny bit left of the gap to 133.36 or the low from May 20. In order for a phase change to confirm, we will need a second close above the 50 day moving average. And since tomorrow is Friday ahead of the long weekend, I would not anticipate strong volume nor at this point is it as big a factor as it was a couple of days ago. Here's yet another lesson in studying the slope of the 50 day moving average as a means of evaluating how strong or weak the phase is. 134 is our next overhead resistance and 132 now pivotal and support.
QQQ did not have its second day of accumulation in volume nor could it get back up to the 50 day moving average at 57.43. That also leaves a gap to fill up to 57.76. However, the slope is positive making the warning phase weak. But again, in anticipation of the long weekend, not expecting tremendous volume and it could be a quiet day.
IWM-first I must make a correction and clarify that yesterday was not an accumulation day in volume nor was today. Therefore, although it touched the 50 day moving average and had much better price action than the other two indexes with an upward sloping 50 day moving average indicating a weak morning phase, volume must begin to come into this index along with continued positive price action.
DIA had an accumulation day in volume today but was unable to get above the 50 day moving average at 124.05. This also has a gap to fill up to 124.85. What would be very interesting is if this gapped above today's high 124.17, did not fill the gap and then continued higher. That would actually leave the potential for a strong bottoming formation. I'm not predicting this to happen, merely pointing out that that it is one of the possibilities. The other possibility is that it doesn't do very much ahead of the holiday or it actually closes lower but leaves the slope of the 50 day moving average positive thereby closing this week in a tepid warning phase.
ETF's: classic beautiful chart formation to study is IYR. After the gap lower on Monday, yesterday we had the opening range reversal against the 50 day moving average with extraordinary follow-through today. The best scenario for a low risk entry on retracement to a major moving average is illustrated with this ETF. Where does it go from here? There is a trendline that comes down from the high made on April 28 that connects with the high today. A close above 61.75 will breakout. 61.13 below the adaptive moving average and yesterdays high now becomes pivotal. Similar action in XRT and IYT.
FXI last night I wrote about the potential swing trade against the recent swing low if it cleared the 200 day moving average. That happened today, but will need a second day to confirm the change in phase from distribution back to warning.
SMH confirmed its phase change back to bullish. I went home long NVLS, one of the semiconductors but will be watching the ETF carefully for follow-through above today's high. Has a gap to fill up to 35.70 and the adaptive moving average is at 35.80.
XLF closed right on the 200 day moving average at 15.57 with an unconfirmed phase change from distribution to warning. Also has the gap to fill up to 15.70. We still need SMH and XLF to remain firm in order for a rally to sustain.
It was encouraging today to see follow-through in XLE and OIH both of which have upward sloping 50 day moving averages. Both of which also have overhead resistance at the 50 day moving averages. Those will be the next critical levels to watch.
FXE continues to hold 140. I still see that as an important area for the Euro which of course also impacts many of the commodity related ETF's and stocks.
GLD**this will be my focus tomorrow as we now have two days under the floor trader pivot and a hold of the adaptive moving average. The FTP comes in at 148.15. I will use a two or five-minute opening range above the FTP with an initial risk under today's low 147.59 which is about the right risk for a mini swing trade. Daytraders can use the low of the day. If it opens beneath the FTP, then I might be inclined to wait for an opening range reversal either against today's low or perhaps if it tests the fast moving average at 146.80.
SLV held the 70 day exponential moving average. Today's high filled the gap that was left from May 10. Since I like to see two days under the floor trader pivot, would not be looking to establish a long position in Silver until we get a better setup with short-term trading patterns.
Picks: Not sure if this is significant, but I did notice that the number of stocks with inside days that outperformed the indexes with both price and volume was relatively small compared to the number of stocks that had inside days and underperformed the indexes in both price and volume. I mention this because it is unusual but again, I have no back testing to see whether it bears attention. The following picks all have strong daily and weekly chart patterns.
CF after the big run this week, today it had an inside day. Two aspects of the chart that are interesting- one is that all-time high was made February 10 at 153.83 and yesterday's high was 153.44. That means that if it clears the all time high after its inside day today you could get a tight risk using today's low 149.61 for a mini swing trade. On the weekly, the Bollinger band comes in exactly where it closed today at 150.58. Even with all time high that was made in February, has yet to close above that band. So a tighter risk might be using 150.58 if it clears the highs. Otherwise, I would be reluctant to buy this on weakness simply because the next area of support is close to 145 which makes risk less controllable. Day to mini
NVLS**back on the list because even though I am now long, it had an inside day today. That means that it now must get through yesterday's high at 35.90 and then the 10 day moving average at 36.17. I took it home because according to my mini swing rules, after it spent three days under the floor trader pivot, today closed above. For new entries, would use a move above R1 which corresponds perfectly with yesterday's high. In fact, if the market is firm and particularly semiconductors, I would consider adding above that level. Day to swing
VMW another one where at this point would only buy new highs provided the risk is controllable. All-time high was made April 25 at 99.19. If we can get through that level looks like we should run up to about 101 as a good first target, although measured potential is much greater. Couple choices of risk-under today's low 96.15 or if you want to use the floor trader pivot that comes in tomorrow at 97.58. Day to mini
SWN**I bought this the other day at 42.70 got out and then never got back into it. Yesterday it had a bullish engulfing pattern and today an inside day with a DOJI candle. 43.15 is the pivotal area not only because that's where it opened and closed but also where the floor trader pivot comes in. That makes it an excellent place to trade off of looking at a buy around that level with a risk no more than to under Monday's low 42.65. All-time high was made on May 6 at 44.69, the overhead Bollinger band right now comes in at 44.75. That means a close above there and we could see much higher prices. Day to swing.
FL**Had a bullish engulfing pattern and after three days under the floor trader pivot closed above but never had a 30 minute opening range breakout. Tomorrow if it holds 24.70 where the FTP comes in, buy it with a risk under yesterday's low 24.38 in anticipation that it will take out the high from May 23 at 25.50 and continue higher. Since there is no way to measure a projected move after this period of consolidation, do it as a mini swing trade using the rules to guide you for profit targets. Day to mini.
A similar chart pattern is DSW. Two inside days in a row and on new highs with an indiscernible projected target although 55 looks reasonable. Day to mini.
Stocks that held key moving averages:
IBM**two notable features on this. One is that it is oversold. Two is that it touched and held the 50 day moving average today at 166.08 with today's low 165.90 which gives us a very clear risk. The slope on the 50 is still moving up. It now has five days under the FTP which is an excellent indicator for timing an entry. The FTP comes in at 166.87. Buy on an opening range breakout provided it holds the FTP and would even consider adding above R1 at 167.84. Can easily go to fill the gap up to 169.38 which is just near the 10 day moving average at 169.17. Although this traded totally counter to the market today, this is a possible swing trade using the 50 day or even the 70 exponential day moving average at 164.66 as a stop. Day to swing
BBBB held the 50 DMA and 70 EMA and in the last couple minutes of the day closed above the FTP and the opening range. Now must continue to hold 41.50 and get through today's high 42.17 to show that it will follow-through. Has some resistance at the 10 day moving average of 42.98 but if you can clear that see a potential move up to 44.50 and possibly beyond since all-time highs were made April 19 at 50.26. Day to swing.
AAPL this chart either looks like a bear flag forming or with today's inside day after yesterday's action a pause before it continues the rally. Therefore, I would have this up on my screen and look to buy back above 336.44 R1 with a risk to under today's low 334.43 or sell under today's low looking for a move down to the 160 exponential moving average at 326.50.
Goodnight!
