Tuesday turned out to be a rally to resistance which was a concern but clearly not a certainty until Wednesday U.S. traders awoke to the big gap lower. So what happens now? Since the rally did nothing to abate the strong warning phase, we have to respect that the next possibility is more likely lower prices.
S&P 500 (SPY)With the failure of 132.75, back to thinking the 65-weekly moving average is next at 129.35 level.
Russell 2000 (IWM) 75.50 the 200 DMA
Dow (DIA) Opened beneath 125, and kept south. Now, 122.35 next support.
NASDAQ 100 (QQQ) Best we can say is that this held an exponential moving average thanks to AAPLmainly. But unless it gets back through 62.60, no reason to cheer
ETFs:
GLD December 2011 low and May 2012 low creating a possibility of a double bottom, but that has to prove itself out.
XLF (Financials) 13.70 last swing low and just beneath the 200 DMA
IBB (Biotechnology) 123 the 50 DMA
SMH (Semiconductors) Why we look for 2 days above or below a major moving average before a phase change confirmation
XRT (Retail) Held the 10 DMA so watching today's low to hold or break
IYT (Transportation) Very similar to XRT
IYR (Real Estate) Perfect run to the 50 DMA with a failure which was difficult to trade with the big gap down. 60.00 next area to watch
TBT (Ultrashort Lehman 20+ Year Treasuries) TLT kind of a shocker on these new all-time highs.
Longs: On categories: Gap higher days we go to all categories and choose ones with lowest risk that break the opening range. On weaker days, we look at Category 3, especially if the picks hold S1, previous day lows or a major moving average and have a good risk on the reversal. The difference between Category 1 and 2 is the stock condition-a Condition 1 is strongest stock and more likely to make a parabolic move.
Note: We are in this in between day with strong stocks having only 1 day under the FTP-makes it challenging to categorize. Here is a separate list of those stocks that now have to clear R1 or wait for a 2-day correction:
EQIX R1 165.50 and inside dayBBBY R1 73.68 CERN Condition 3 Has to hold 79.35 clear 80.32 REGN R1 62.89 ROST R1 62.89
Category 1:(Aloha) Positive Phase, Condition 1, 2 days under the FTPs, Risk to Previous Day low, Can buy ½ over FTP and ½ over R1, Target- Day to at least 3 ATRs from entry:
AOL Should hold 27.00 and clear 27.44
FDO 66.00 max risk and should clear 67.06 then R1 67.58
Category 2:(Pipeline) Positive Phase, Condition 2-3, 2 days under the FTPs, Risk to Previous day low, Can buy ½ over FTP and ½ over R1, Target- Day to at least 3 ATRs from entry:
GNC Must hold 38.37 clear 39.24
Category 3: (Double Up) Positive Phase, Condition 1 through 4, Positive Pivots which means can either buy a opening range breakout or candidate for Opening Range Reversal, with Risk S1 or previous day low, whichever is lower unless noted differently, Target- Day to at least 3 ATRs from entry:
VECO Condition 3 and must hold 34.05
Category 4: (Rip Tide) Oversold (2 or more days under FTP), Condition 1-4, Needs to clear R1, Risk previous day low unless noted differently, Target- Day to at least 3 ATRs from entry:
ALXN not oversold, but as long as 90.20 holds, R1 is 92.45
BIIB Oversold 129.29 max risk to 50 DMA R1 and today's high should clear
LULU Not a condition and needs to clear today's high to return to bull phase. Narrow range day
Slingshots:LO New 60-day low. Must hold 122 and clear today's high and R1 125.12 UNH Has to clear the 50 DMA 56.65 RHTOnly if clears 51.88 AAPL Still in strong warning phase but positive pivots so worth watching EL has to hold today's low
Shorts: Lots getting oversold again-ultrashorts are possible but would prefer OR high failures
Category 5:Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
APA Cannot cross 82.77
FCX Cannot cross 32.73
GDI Cannot cross 56.50
SLB Cannot cross 65.59
ADSK Cannot clear 32.46
CSTR In a warning phase against the 50 DMA which means cannot clear 62.45
Category 6: White Cap-Having a 2-3 Day correction over the pivots. In a Negative Phase, Positive Pivots. Can sell an Opening Range High Failure if happens below R1 or previous day high whatever is higher and/or weakness if breaks S1 and prior day's lows
N/A
Goodnight!