Prepared by Geoff Bysshe, President of MarketGauge, filling in for Mish for Until December 13th.
Wednesday the Fed is expected to announce its replacement plan for the soon ending Operation Twist. Today's run up suggested the market is getting more confident in a rally in the face of the Fiscal Cliff and without worry that the Fed will announce anything to detrimental to the markets.
While the news may not be bad, the SPY and the DIA have had a nice run and the 50 DMA is still negative. Beware of profit taking.
S&P 500 (SPY) Broke out and followed through nicely.142.92 should be support now. Today's high tapped the trend line from the September highs. Subs: Positive Pivots
Russell 2000 (IWM) Broke above its consolidation high. 82.75 is the key support level now. Subs: Pivots Positive
Dow (DIA) Continued higher and found resistance at 133.12 as you should have expected. Unless there is a news catalyst it could be a good time for a rest against the 133 area. Subs: Pivots Positive
NASDAQ 100 (QQQ) Three ticks shy of breaking its daily consolidation and it had some help from AAPL. Must hold today's lows. Subs: Pivots Positive
ETFs:
GLD Holding anticipated support in the 165 area.
SLV Holding anticipated support in the 31.80 - 31.60 area.
XLF (Financials) Key levels are 16.20 on the upside and 15.92 on the downside.
IBB (Biotechnology) Nice volume follow through from Monday's reversal. Support should come in at 140.40. Watch out for 143.60 on the upside.
SMH (Semiconductors) Closed above resistance line from the 2012 highs and the 200 DMA. Explosive moves in its biggest components - TXN and INTC. 33.30 area could be significant resistance
XRT (Retail) A struggling transition into a bullish phase. Has potential to go either way.
IYT (Transportation) Moved up, but closed near the LOD. 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) Didn't make much progress and closed near the LOD. Very light volume. Look for 64.90 on the upside with support at 64.15.
XLI (Industrial Spdr Fund) 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? It tried to break out today but only reached 39.34 on big volume. The daily if very compressed. It could go either way big. Under 38.50 it is very vulnerable.
XLE (Energy) Subs: Closed over the 50 DMA and daily consolidation but consolidated all day. Must hold 71.60, next support is in the 70.40 area.
TBT (Ultrashort Lehman 20+ Year Treasuries) Moved up to the top of a 3 week range. Very subject to the Fed meeting.
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:
DISH 37.30 is the key area to break. Max risk 36.50
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:
SJM Another very tight consolidation day, plus the pivots turned positive for tomorrow, and nice daily flag. Good risk is flay low at 87.14 or daily level of 47.48.
SLAB Big breakout with little follow through on decent volume. Should hold 42. It has room to run over today's high.
V Retreated from a big intra-day volume bar at the HOD but so did the market. Max risk 148.27.
TRV 4 nested inside days
SIG Finally broke out and on good volume. Look for support at 54.80 and 54.50. This has room to run over today's highs
EBAY Nice slingshot reversal with volume. I prefer to see it break 52.20, but 51.40 should be good support.
LULU Must break 74
EXP Back over the 10 DMA on good volume. Must be above 53.20
TROW Must be above 64.90
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
AGU Must be below 100.40
BC Must be below 26.30
MJN Inside day so must be below 66.77. Prefer to wait for break of 66.38 daily low
TSCO Pivots are positive. Must below today's low of 85.18.
AOL Good support at today's low area, 31.00, but a break could run. OR reversal against 31.40 also looks good.
Best wishes for your trading,
Geoff Bysshe
President
