What did Monday illustrate? 1: The sectors that are best to watch to assess where we go from here are Retail, Real Estate, Financials and Transportation. All closed green and outperformed their corresponding indexes (S&P 500, NASDAQ, Russell 200, DIA) 2: NASDAQ which signaled with double tops and a bear flag, now tested and held the 50 DMA which maintains a positive slope not to mention a bull phase. 3: If DIA can clear today's high, it will negate a possible bear flag formation and although the index is teeny, a decent reason to at least not go gangbusters short. 4: AAPL is oversold on the daily RSI and holding a gap to 568.
S&P 500 (SPY) Held S1, closed under Friday low and in a confirmed yet weak warning phase with an upward slope on the 50 DMA
Russell 2000 (IWM) R1 and today's high line up perfectly should market open well
GLD Held the fast moving average but does look like the daily moving averages are headed to a death cross. 155 has been the bottom of the recent trading range.
XLF (Financials) Inside day. 15.12 is the 50 DMA ending the week and it did indeed hold with a positive slope. So again, anything is possible-a failure back to looking at 14.50 or a hold, move over Monday's high and another run.
IBB (Biotechnology) February and March low was 115.64 and 115.83 respectively.
SMH (Semiconductors) Since it failed to close above the 50 DMA, the low tick last week, 33.82 could be in the cards.
XRT (Retail) Ever so important here. Over today's high, look for a rally. But, since has the gap lower in place, be ready for anything, including a possible test of 58.50
IYT (Transportation) Good performance, but it closed under the 50 DMA and right at Friday's high so can make a case for either direction.
IYR (Real Estate) Took home the balance long on the opening range reversal with a cushion. Like to see it trade above 62.13 if really good.
OIH (Oil Services) 38.30 last week low with an oversold weekly RSI
XLE (Energy) Oversold weekly RSI
TBT (Ultrashort Lehman 20+ Year Treasuries) Over 18.86 clears R1 and today's high so maybe worth another try on long side
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: Focusing on Condition 1 and 2 mainly
Make sure you check earnings-Many report next week
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:
BBBY 2 days under FTP must hold today's low
ESRX 2 days under FTP must hold today's low
REGN Now 2 days under pivots. Would like to see R1 clear and hold 122.15
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:
FOSL 5 days under the pivots. oversold and still a good one to look at for possible bounce through the pivots. Reports 4/20
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: (There are more picks in this category since these are the strongest stocks)
UA Like to see 94.88 hold
TWC Inside day. Has to hold today's low
UPS Like to see 79.50 hold
SPG Reversal only against 147.00
CHKP Like to see 62.55 hold
COP 73.42 has to hold
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:
AAPL 5 days under the FTP. The RSI is oversold on the daily. The FTP at 589.67 is an area to watch.
FCX (Not a condition) Over today's high still holding key weekly and monthly moving averages. Max risk today's low
ALXN (Bull phase not a Condition) Over today's high
Shorts:
AMZN Cannot clear today's high nor 186.60 if short is good
SINA Should not clear 64.00
VECO Cannot clear 29.00
JOY Cannot clear 75.50
TIF Cannot clear 67.22
Goodnight!
