The initial weakness in the day certainly no surprise, but the real question is whether the end of day rally and hammer candle left in S&P 500, NASDAQ and the DOW is a reversal with more upside to come given the weak warning phases? Russell 2000 tested and held a major weekly moving average. The financial sector held 15.00 (XLF) and Real Estate (IYR) held 63.00 closing virtually unchanged. Volume spiked in the SPY leaving a second significant distribution day. I would have preferred the volume spike and a green close, but one thing is for sure; after testing the recent highs, now lows, market will soon prove itself much bigger one way or the other. Wednesday could be a major key as to which way.
S&P 500 (SPY) After 5 days under the FTP, a move over R1 hard to argue with. However, another failure at 136, sobering
Russell 2000 (IWM) Held the 160 EMA and closed just on the FTP after 6 days beneath. Also held the 65 weekly moving average. R1 at 79.69
Dow (DIA) Hammer and doji back above the 70 EMA. Watch IBM as it is oversold and big component in this index
NASDAQ 100 (QQQ) No volume spike but a hammer candle with resistance just overhead. Big eyes here before we get too excited about any rally turning out as anything more than a good sell opportunity.
GLD Short paid off with cover today as it approaches oversold. But will look for another opportunity as 155 support will not hold the next time
XLF (Financials) 15.00 swing area. Longer it holds the better the chances for the market. A failure and see a test of the weekly moving averages below
IBB (Biotechnology) Once the VRTX news runs its course, possible this has seen the highs for now. Only way to alter than bias is if the recent highs are taken out
SMH (Semiconductors) Oversold and got close enough to 32.00 to assume a bounce to 34.00 very possible
XRT (Retail) If the market can rally, this has to come along or rather start leading again. That means a move back over 61.25 or trouble still lurks
IYT (Transportation)
IYR (Real Estate) Over 64.20 and this gets exciting
USO (US Oil Fund) Over the 200 DMA corresponds with R1
OIH (Oil Services) Oversold with possible slingshot and room for a good short covering rally
XLE (Energy) 5 days under pivots and another hammer candle after making new lows. 69.45 overhead resistance
TBT (Ultrashort Lehman 20+ Year Treasuries) Watch 18.05
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.
A couple of post earnings: MRX multiyear high 40.51-could leave a breakaway gap DIS 44.50 all-time high possible breakaway gap
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:
AMZN 5 days under the FTP and held 10 DMA. 222.50 good risk and should clear R1 226.90
SWI Must hold today's low with 45.00 tighter risk
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:
AXP Like to see 59.75 hold and clear the 10 DMA
EQIX Should hold 155.75 the FTP and eventually clear the 10 DMA
ACE Inside day must hold today's low and clear the 10 DMA to stick
BBBY Swing risk the 50 DMA mini 67.75 and must clear 68.81, then the 10 DMA
CTXS Should hold 80.95, take out R1 as it approaches oversold
HOG Has to clear R1 51.30 and hold today's low plus clear the 10 DMA to stick
Category 3: (Double Up) Positive Phase, Condition 1 through 4, Positive Pivots which means candidate for Opening Range Reversal, Risk S1 or previous day low, whichever is lower unless noted differently, Target- Day to at least 3 ATRs from entry:
SLG Should hold 81.00 and clear the 10 DMA to return to a condition 1
KSS Range expansion prefer reversal and eventually needs to clear 52.00 for longer term hold
MCK Must hold today's low reversal or strength ok
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:
MJN Risk today's low
PM Max risk today's low
LVS (Not a condition) Oversold and good risk to today's low must clear 53.61 to see pop to 57.00
Other: Negative pivots for only 1 day and good condition: PNC Inside day, must hold today's low and clear 10 DMA
Slingshot Possible and Oversold: F APA CAT OXY EOG
Shorts: Nothing with an RSI under 15.00 to narrow list
BHI Cannot clear 41.83
BTU Cannot clear 29.59
DECK Cannot clear 53.55
MOS Cannot clear 51.16
Goodnight!
