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
The Fed minutes gave the bulls what they wanted to hear and then Apple juiced up the Q's, but the wedge I spoke about yesterday widened with a lower low.
The bigger picture, however, is that all 4 indexes broke yesterday's low, held at their respective significant support levels and bounced. Since all but the Q's have tapped their 10 DMA we need to consider the fact that in strong trends where the 10 day holds that is often all the bears get.
The bears do have a negative pivot pattern that must be resolved for the bulls to take over, and the DIA and IWM closed below the prior day's low. So weakness may lead to more downside, but strength above key levels mentioned below will but the bulls back in control.
S&P 500 (SPY) 141 is the big support level I've been focused on and it held the market up today. Today's bounce off the 10 DMA is the first in a month. If it moves higher tomorrow look for 142.30 to be key resistance.
Russell 2000 (IWM) Closed below the prior day low by a few pennies. Take note that it did not rally beyond its initial spike higher on the release of the Fed minutes. Let it consolidate as long as it holds 80.50. The bulls may be back in control over today's high (81.50), look for resistance at 81.90.
Dow (DIA) After its close under the prior day low yesterday it was the weakest index which led to today's sell off to the 20 DMA and the key support level of 131. This is the best index to have a negative bias on. It's high today is under the 10 DMA.
NASDAQ 100 (QQQ) The strongest index today and never tested its OR low.
ETFs:
GLD The Fed minutes launched it to close up sharply and over the 200 DMA.
SLV The Fed minutes propelled it higher for now a 3rd day in a row to close over R2. This is probably to far too fast, but it's no surprising given the base it had formed. Wait for consolidation to determine the next move.
XLF (Financials) Today was a healthy consolidation day after the prior day's reversal. The 10 DMA is not at the 15.06 level were calling a breakout just a few day's ago. This should be good support if it gets weak.
IBB (Biotechnology) Had a steady up day to close over the prior day's high. It looks like it wants to go higher. 135 is big resistance level.
SMH (Semiconductors) Today's high is now under the 10 DMA and the 20 DMA is just under today's low. A break of either side of today range could be significant.
XRT (Retail) Should hold low at 60.79 or 10-day MA at 60.60 as it continues to consolidate.
IYT (Transportation) Yesterday it stopped dead at the trend line from the 2012 highs and today held the support at 92. The next level of support will be around 91.50.
IYR (Real Estate) The key range is 65.30 to 64.15 where a breakout over 65.30 should lead to new highs. Today tested the low end of the range and staged an impressive rally back up to the high. You'll find some interest tocks in this group on the list today.
USO (US Oil Fund) 35.90 is the short-term bull bear line in the sand. Until it breaks that level, let it continue to reach for the 200 DMA around 36.80.
OIH (Oil Services) Not surprising that it's high is 41.40 based on last week's high. 41.55 and 41.75 are the next resistance levels we should expect to test if 41.40 is taken out. Beware of XLE, if it's falling wait on your long OIH.
XLE (Energy) The 71.65 level held it up nicely. It didn't break its OR low with the rest of the market, but I'd still prefer to be long OIH for energy exposure.
TBT (Ultrashort Lehman 20+ Year Treasuries) Yesterday's "very interesting reversal pattern over the last 4 days" in the TLT resulted in what now looks like an island bottom. I'd look for TBT to test the 15.40 level.
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 1:(Aloha) Positive Phase, Condition 1, 2 days under the FTP
SLG One of two real estate stocks on today's list due to their strong recovery from the low of the day. Back over the 10 DMA, I'm looking for an OR reversal above 80.50. Anything lower I'd pass on. Max risk is 80.20.
BLL Great looking slingshot 123 pullback 42.60 area would be great for a reversal, but a breakout is worth following too. Max risk 42.15.
RHT Two inside days. Looking for a breakout over 58.65. Max risk 57.50.
JPM Nice consolidation and inside day after a big breakout on Tuesday. Only one day under the FTP but nice tight risk at 37.50. Entry should be over 37.85.
Category 2:(Pipe Line) Positive Phase, Condition 2-3, 2 days under the FTP
VTR Interesting real estate stock with a big volume day on the 50 DMA and crossing the 10 DMA. Max risk 63.40.
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:
AMGN 83.90 level is pivotal. 83.50 area is a good place to look for a reversal. 82.65 is max risk.
PPG Massive reversal day on the 50 DMA to transition into a category 1. Prefer an OR reversal at FTP level of 109.65.
CELG Prefer a reversal against 71 or a breakout over 72. Max risk 70.80.
DTV Prefer a breakout over 51.70 level. Max risk 51.15.
LNKD Has consolidated for 2 days and has an inside day. Looking for a break out over 106.10. Max risk 104
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:
Phase Change:
LLL Consolidation at the 200. Inside day. looking for a break out over 69.92. Max risk 69.
Shorts:
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
AGN Has very big support at 85, but in a weak market I'll look for a reversal against the 85.90 level. Max risk 86.60 level.
CLF Still looks like a short. Look for OR reversal, preferably against the 42 area with a risk of 42.00. But break downs with a stop over 42 look good too. Max risk is 42.60.
COH Inside day. Consider reversal against 55.83, and look for break down below 54.55. Max risk 56.
AXP Very big wedge on the daily chart could break either way. Consider reversals against 57, but prefer break downs below 58.75. Max risk 57.15.
Other:
MUR Looking for a breakdown from the 200 DMA. 53.50 is support and only want to be short below that level. Max risk 54.20
Best wishes for your trading.