Prepared by Geoff Bysshe, President of MarketGauge, filling in for Mish until September 4th.
While I'm filling in for Mish you can follow my swing and daytrading in real-time in our trading room (instead of twitter) called "Daytrading with HotScans" here: https://marketgauge.com/?page_id=1232
Yesterday I ended my lengthy commentary with, "Monday's have been weak in recent weeks so don't be surprised to see weakness and even a down day."
With the exception of the QQQ all three market watch indexes spent all day in the red. This is good because it is the routine of the market right now. Let's not wish for anything more than a rally that "gets no respect" as the WSJ had on the front page today.
August trading is going to be slow. We did a good job today in the room of picking up the Q's at the lows and selling then at the highs because when the weakness comes in the morning you don't have to be patient (traders generally don't like to wait), and when weakness is expected you don't get caught off guard.
Sorry I can't promise the same nice pattern tomorrow, Tuesday.
We do have a mildly negative pivot pattern in all but the Q's so if they are breaking down below their pivots let them get weak. I'll fade weakness as long as our buying on dips conditions are in place.
If you're waiting for me to comment on volume, I won't, I was horribly low as we should expect. I only care if it's big in seasonally low volume periods like now.
S&P 500 (SPY) I don't want to over analyze this. 141 is the big support level. I'll feel better as a bull if we test this sooner rather than later. Until then use the OR and pivots as your guide to interim lows to trade off of for day trades.
Russell 2000 (IWM) Friday's low only broke by a penny (that was the key our getting long the Q's) and that leaves it with essentially an inside day at the July highs. If it breaks the 81.86 high it may be worth following up.
Dow (DIA) 133.14 is the 2012 high. Another narrow range day inside the Thursday range. I'll repeat what I said yesterday... Key support areas are 132.00 and 131.30.
NASDAQ 100 (QQQ) 68.55 is still the intraday 2012 high, but it did manage to close up by 8 cents, which leaves me feeling as I felt yesterday... A reversal after taking out this high would have traders looking to sell the "top". I look at a 3-period RSI, and with the last 2 days closing with an RSI reading at or over 99. I don't expect much upside here Monday.
ETFs:
GLD Saw a big volume OR breakout and closed over the trend line based on closes from the 7/27 high. Still.... Will this have what it takes to get through 158?
SLV Blasted through the 27.50 level I mentioned yesterday. I'm looking to buy weakness over 27.50 now.
XLF (Financials) A quiet continuation of its breakout.
IBB (Biotechnology) Nothing remarkable going on here but you'll see some interesting biotech and pharma stocks on the list today keep an eye on the long side here. If the market gets weak, we'll look to see if this group finds buyers.
SMH (Semiconductors) It held the 33.30 level mentioned yesterday to the penny. Needs to stay above 33.30 or next stop may be 32.55. That said, the upside looks great if it can clear 34.00.
XRT (Retail) Should hold today's low at 60.79.
IYT (Transportation) Confirmed phase change to bullish. Now, can buy dips more safely. The 94 area is resistance and the trend line from the 2012 highs. Look for support around 92.
IYR (Real Estate) The key range is 65.20 to 64.15.
USO (US Oil Fund) Getting closer to target of 36.50 level. A dip down to the 35 would be worth considering.
OIH (Oil Services) I still think 41.20 is the key level to use as the bull/bear bias level
XLE (Energy) Big resistance at 72.77 - 73.00. Draw the resistance line from the July 2011 highs.
TBT (Ultrashort Lehman 20+ Year Treasuries) TLT's are sitting on their 200 DMA. Expect TBT to consolidate.
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: Anything that is on this list is a candidate for a swing trade (of course market condition is a factor). Use the max risk mentioned along with an opening range stop along with a fudge factor and time confirm. I suggest you decide on 1 or 2 that have a risk you like and then position size accordingly.
Category 2: Condition 1 with negative pivot stack. Look for entries over the FPT.
TGT - Very strong daily and has pulled back but must clear 63.80. Max risk is 63.30.
AMGN Inside day on the 10 DMA. Must be over 83.09 to enter. Max risk 82.65.
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:
COF A financial stock worth pursuing. Max risk 55.90.
ASML Closed over tight daily consolidation. Risk 57.50
EWW Very tight daily consolidation 62.68 level to hold and 63.31 next place to clear.
TSCO If it can head higher it has a clean shot at 100, but it must hold 93. Look for a breakout over the 94.20 area.
CRZO Nice breakout potential over 26.20. Max risk 25.40
CELG The daily pattern is a nice Slingshot U-turn (but the phase prevented it from showing up on our scans). Max risk is 70.00.
CBST TheFTP at 43.47 lines up nicely with daily support levels around 43.50. S1 at 43.13 also lines up nicely with intra-day support levels. And your max risk level of 42.96 good support.
DTV A very nice slingshot 123 pullback with an inside day. R1, yesterday's low and the prior day's significant intra-day low all line up around 51.10 so there's your max risk.
HSY A very nice slingshot 123 pullback and FTP Transition pattern. 72.10 is and good support level for intra-day risk and max risk is 71.70.
Category 4: (Rip Tide) Oversold (2 or more days under FTP), Condition 4, Needs to clear R1, Risk previous day low unless noted differently, Target- Day to at least 3 ATRs from entry:
ALXN sitting right on the 50 DMA with an inside day with the high of the day at 102.40 and R1 at 102.48. Max risk 100.23 which is the 50 DMA just below the lows of the last 2 days.
Phase Change:
LLL Backover the 200 DMA with an impressive engulfing day and a strange the 50 / 200 DMA pattern. Would consider day trades with max risk of 69 then hold as a swing if closes over 69.50.
HPQ I'm just going to keep my eye on this one for now.
Shorts:
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
CLF - Still looks like a short. Max risk 42.25.
WTW - Bearish engulfing pattern right on the negatively sloped 50 DMA. The 50 area would be great for a reversal. 51.42 max risk
Other
ROST - A strong stock with a bearish slingshot reversal pattern and it has a tendency to pull back hard so it may be worth a short if the market gets weak. Must be below 70.
Best wishes for your trading,
Geoff Bysshe
President