Prepared by Geoff Bysshe, President of MarketGauge, filling in for Mish for Until February 11th.
After 6 and 24 days of direction less trading in the SPY and QQQ respectively, it's hard to expect the indexes to extend beyond their well established ranges. The DIA matched its 8 day low, but the other markets stopped well short of their recent range lows, and they all recovered to close well into the top half of the day's range.
With the market having made an attempt to move lower today, it would be easy to expect it should test the top of the range tomorrow, but I'd be careful about expecting too much beyond that.
It's been a trendless but volatile week. Trade carefully on Friday.
S&P 500 (SPY) Until the two week range is broken up or down convincingly I'm not going to try to anticipate the next major direction
Russell 2000 (IWM) same analysis as stated for SPY
Dow (DIA) same analysis as stated for SPY
NASDAQ 100 (QQQ) same analysis as stated for SPY
GLD Still trapped between the 200 and 50 DMA. But now I think I'd look at a long position over 163.15
SLV (Silver) I'm looking for a 30 min O.R. breakout over 31.00. Until then I'm just watching.
XLF (Financials) The multi-day range here is 17.67 to 17.37. Look for long reversal trades where your stop can be under 17.37
IBB (Biotechnology) Still stuck in its 1 month range
SMH (Semiconductors) Bounced nicely off the 10 DMA. If market rallies look for this to be strong too.
XRT (Retail) 67.20-67.00 is a good area to look for reversals.
IYT (Transportation) This one may be ready to move. 103.50 is the key support and 104.65 is a big breakout.
IYR (Real Estate) Has a tight 5 day range that is right under the 10-DMA. It could have a nice move in either direction when it breaks out of the range. Watch for a breakdown below 67.15.
USO (US Oil Fund) I'd wait for 35.15 to break to consider longs.
OIH (Oil Services) Held up well today. If the market is strong look for a long opportunity here.
XLE (Energy) 78.20 is the big number to break on the upside, then 78.60. Look for support at 77.35-00.
TBT (Ultrashort Lehman 20+ Year Treasuries) Trend is up. Today could have shaken out weak longs and it closed well so watch it closely over today's high of 67.82.
XOP (Oil and Gas Exploration) nice move higher. Continues to be the leader in the energy space. Look for weakness to consider a trade.
XHB (Homebuilders) It has been correcting nicely. Waiting for a good set up to enter.
* * * * * * Stocks * * * * * * *
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:
RHT Testing my patience. But sitting on the 10 DMA. I'd prefer to wait to clear 56.00 to get long.
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:
MOS Inside day. Tight 4 day consolidation 61.40 is the level to break before considering a long. Then 62.00 is the big number.
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)
TRV: Closed strong and over 3 days of consolidation. Good quick breakout candidate over 79.16
MCD: Negative pivots so should be over 79.65.
F: Negative pivots so should be over 13.13. I'm looking at this as swing where 13 and the 12.90 should hold.
GM Looks just like Ford but a few days ahead of it in terms of moving over the 10 DMA Looking for a good volume breakout over 28.50.
SWN: Still looking to catch the day that this breaks over 35.00. Reversals have worked well in this stock watch for them. S1 lines up with today's lows around 32.20
KSU: looking for it to breakout over 95.30
C: May have broken and run today if the market didn't pull it down. Watching for an O.R. breakout
NKE: In a good position to breakout and run. Important support at 54.39 and 54.26.
LVS: Nice sling shot pull back to the 10 DMA. Must be over 54.40
WFM: Impressive Key reversal on the 20 DMA. Must be above 93.40
CBS: Impressive outside day on the 10 DMA. Must be above 42.00
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:
N/A
Shorts:
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
YUM: Has rallied back up to break down level. Must be below 63.35
Other Shorts: Not in a negative phase but in a position to fall if the market sells off
ONXX: Resistance at 76.35 for a reversal. A breakdown may work too.
UNP: If it starts to fall it has a lot of room to go. Must be below132.60
RTN: Has rallied back up to the 10 DMA. Must be below 53.85
WY: May be rolling over. 30.70 lines up with daily lows and R1.
JCI: May be rolling over. Key resistance at 30.75-.90
QIHU: Watch out for a breakdown below 30.84
Best wishes for your trading,
Geoff Bysshe
President
