Lesson learned is to respect brick walls, especially when they happen in the Russell 2000-small caps or the index that led the whole way up. Another lesson is in following the flight to quality in interest rates. They dropped significantly ahead of the sequestration as if all of a sudden investors got a clue that perhaps the cuts cannot be resolved. But last minute is how they play on Capitol Hill, which means, anything can happen. Therefore, watch both the Russells and the rates with the same scrutiny as Sherlock Homes with his magnifying glass.
S&P 500 (SPY) Lots of buzz about 3 distribution days in volume since making the highs last week. In our research, 3 or more within a 2-week period is a warning sign. Couple that with a slingshot high and an uncertain political climate and whammo. But, the phase remains bullish as long as SPY can hold the 50 DMA. Subs: Got the 1.5 ATRs this morning after last Friday's opening range reversal which I tweeted and pointed out was a place to take profits given the negative candles. The balance was a no loss stop.
Russell 2000 (IWM) 87.75 is the 50 DMA. 91.00 now significant resistance Subs: Pivots Negative-watch for a reversal in TWM-the ultrashort against 21.70 area
Dow (DIA) Cleared the 2013 high early on then turned on a dime, taking out all the work from February in one full swoop. 135.90 is the 50 DMA
NASDAQ 100 (QQQ) Back in an unconfirmed weak warning phase with the 50 DMA 66.68-now pivotal. Subs: QID went into an unconfirmed recovery phase-first time I even covered the ultrashorts on the daily video in quite some time
GLD Not a surprising bounce here given the gap higher oversold conditions and 2 inside days. 156.00 resistance. Subs: Bought the opening range reversal, took ½ ATR and now will keep no loss stop at 153.50 to play it out
XLF (Financials) Real close to the 50 DMA 17.11. A failure of the current bull phase will be reason to think this can see Jan lows 16.74.
IBB (Biotechnology) 143.44 the 50 DMA. Subs: After looking so much better, now back to a possible short setup for 2013.
SMH (Semiconductors): Subs: 34.00 area still of interest but will not try to catch the falling knife. Will look for evidence that it will hold for real
XRT (Retail) Never cleared the67.75 resistance and now looks like 65.00 the 50 DMA is in the cards
IYT (Transportation) Could not clear the brick wall highs but still a good place to look for a long entry once dust settles. Subs: Back to looking at 102 to hold
IYR (Real Estate) 66.60 the 50 DMA and another tell last week after it made new highs and could not hold up
OIH (Oil Services) Subs: Will stay aside until we can see whether this holds or fails the 80 monthly moving average by February's end
XLE (Energy) 75.10 the 50 DMA to hold
TBT (Ultrashort Lehman 20+ Year Treasuries) Can finally say it broke the candle form February 1st after 14 days trading within it. Only, alas, it broke to the downside. Subs: Weak warning phase-let's keep an eye on the 50 DMA
XOP (Oil and Gas Exploration) Subs: If you were long on the OR reversal from Friday, used a no loss stop and are now gone
XHB (Homebuilders) Subs: Was a short pick for 2013 but only now is it starting to look real weak. Need a better setup to short
UUP (Dollar Bull) Subs: 22.65 is the 200 weekly moving average
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: Lots of warning phases so will only look at outperformers today
Category 1: (Aloha) N/A
Category 2: (Pipeline) 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: (Opening range reversals are good on anything above S1)
OPEN* As long as 54.00 holds, still has a shot to clear recent slingshot highs 56.41. The 10 DMA at 54.46 is pivotal
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:
CI Oversold condition 4 with 56.95 the 50 DMA beneath it. A good one to watch for any short covering rally
Phase Change: YELP still hanging onto the 200 DMA as long as 21.55 holds NTES Held up better than most. Max risk now 51.10 ACT If 82.02 holds could still be working the slingshot. CNQ 29.85 is the 50 DMA and now pivotal or could see 29.45 area again RAX Slingshot low in place. 55.15 is R1 and today's high to clear TWC Tried to confirm a slingshot low and will if can get back above86.80 with risk under today's low
Shorts: If risk is not clear, I am not including it for a trade. Rather sit this out and wait for better setups, or trade OR high failures in the indexes
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
IACI* Already short with max risk now today's high
FDO Max risk now is 56.80 so a reversal could be preferable
AAPL Prefer an OR high failure against 447. Overall, chart still looks heavy 435.86 the slingshot low next support to break
NUS Inside day with risk to today's high. Support at Friday low then 37.00
NVDA Failed the converging moving averages with 12.55 now max risk and 11.90 next support
TDC 63.55 is max risk and really should break S1
BIDU 89.36 best risk and again, a reversal would be better
Bye for Now!
