Prepared by Geoff Bysshe, President of MarketGauge, filling in for Mish for Until December 13th.
There were some nice moves in our individual stock selections but the indexes were very quiet. As a result subs will find today's stock selections have an emphasis on the compression pattern of an inside day.
On Wednesday the Fed is expected to announce its replacement plan for the soon ending Operation Twist. If the market falls asleep tomorrow, don't try to trade price action that doesn't really exist.
S&P 500 (SPY) Now a confirmed but weak bull phase. It needs to clear last week's high of 142.92. Look for support at 142.16 - 142.00. Subs: Positive Pivots
Russell 2000 (IWM) More consolidation. Has to get above 82.80 to make the 50 DMA a distant memory. On a positive note, the 10 DMA has now clearly crossed the 50 DMA for the first time since late Oct. Subs: Pivots Positive
Dow (DIA) Edged higher. Look for support at Friday's lows and resistance at 133. Subs: Pivots Positive
NASDAQ 100 (QQQ) The only one of the 4 indexes that did no break the prior day high. It is still consolidating. However, below 64.50 that's in question, and under 64.25 the down trend may gain momentum. If it moves higher, 65.77 is a key level to break before the bigger test of the consolidation highs at 66.37. Subs: Pivots Flat for a second day
ETFs:
GLD Gapped up and sat at the 166 resistance level we anticipated - 166. Upside looks like 167.50. It's sitting right at the negatively sloped 10 DMA. If it heads lower look for support at Fridays high of 165.22.
SLV Broke a 4 day range high but could not clear its opening range and fell back below the key level of 32.20. A good breakout could run quickly to the 33 area. Look for support at Friday low, 31.84 and 31.60 areas.
XLF (Financials) For all practical purposes, it had an inside day.
IBB (Biotechnology) A complete reversal from Friday's action. If it moves over Monday's highs its worth following.
SMH (Semiconductors) An inside day right under the 200DMA. A break of Friday's highs improves its phase and confirms a break of the weekly resistance line from the 2012 highs. Must hold 32.20 to remain positive.
XRT (Retail) A struggling transition into a bullish phase. Has potential to go either way.
IYT (Transportation) Broke PDH and followed through on decent volume making it a confirmed accumulation phase. If it can consolidate over the 200 DMA then I'll change my disinterested stance, but until then I maintain that buying strength at the top of a daily range in this index has been the wrong thing to do all year. Below 92 this is a good short candidate in a weak market.
IYR (Real Estate) Friday's breakout continued nicely but was pulled back down by the general market. Look for 64.90 on the upside with support at 64.15.
XLI (Industrial Spdr Fund) Continued to move higher and stopped at logical resistance at 37.74. Volume was light but price action was healthy. 37.40 should be good support, and resistance is 38.07.
OIH (Oil Services) Will last week's death cross prevent a breakout over the 200 DMA and daily consolidation high of 39.28? Under 38.50 it is very vulnerable.
XLE (Energy) Subs: Tried to breakout but stopped dead at the 50 DMA at 71.80. Support is in the 70.40 area.
TBT (Ultrashort Lehman 20+ Year Treasuries) In the middle of a 3 week range.
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 using fudge factor and time confirms. 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 FTPs, Risk to Previous Day low, Can buy ½ over FTP and ½ over R1, Target- Day to at least 3 ATRs from entry:
SJM Very tight consolidation on Friday, and nice daily flag. Good risk is PDL at 87.14
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:
N/A
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:
CRM Two nested inside days and big volume in the last 15 minutes. This can't stay here much longer.
PETM NR 7 (narrowest range in 7 days) and an inside day. I'd wait for a break of 70.60
AMT needs to break 75.60
SLAB Inside day, very compressed over the last 7 days. Needs to break 47.10
V Inside day with Friday's high lining up with Monday's high and daily high from 4 days ago. Needs to clear 149.30
TRV 3 nested inside days
Notice the next 4 have the same plans
UNP - Nice breakout of daily consolidation. Look for l long OR Reversal over 124.33.
CELG - Nice breakout of daily consolidation. Look for l long OR Reversal over 79.80.
AMGN - Nice breakout of daily consolidation. Look for l long OR Reversal over 89.40.
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:
N/A
Phase Change: WYN a strong close back over the 200 DMA consider breakouts or OR Reversal against $50.00
Shorts:
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
TDC Inside day
AGU Must be below 100.40
SOHU Must break 37.45
BC Must be below 26
CNQ Inside day. Must be below 28.18
MJN must be below 65.65
IR look for OR Reversal near 48.50
Best wishes for your trading,
Geoff Bysshe
President
Filling in for...
Michele Schneider
