Ms. 200 points is the new 100 points move in the market sure did not disappoint!
Sound familiar? It should. It’s what I wrote the other night after the 270 point drop-applies yet again on the 270 point gain.
You know the maxim about full moons and women’s cycles? It seems to me that Tuesday, Madam Market had a bad case of PMS ahead of the Blood Moon. And Wednesday-well, she took Motrin!
And that brings me to Janet Yellen-clearly the FOMC minutes came out in the nick of time, ya think?
However, before we go nuts buying again, a couple of reminders aboutconfirmation and volume. We need a second day to confirm the plethora of reversal patterns (starting with IWM) and phase changes (QQQs and DIA).Volume: we saw robust volume but was it an accumulation day? (When the volume exceeds the day before’s volume and the close is green).
SPY yes. QQQs yes. DIA marginal. IWM yes. With that question resolved, we do need to see a second day confirm then. And, we also need to consider risk/reward. Swing trading has had its challenges unless you have a strong stomach and a large threshold-remember the Icahn, Buffet and Soros comment?
Most of us though, who look for trending markets are happy we have not been whipsawed through the volatility. True, the markets have rallied after every midterm election for the last 50 years.
Also true that this year has proven to be the year contrary to popular beliefs. I would watch IWM to see if it can clear 110, SPY if can clear the 50 DMA. Conversely, if DIA and QQQs hold the 50 DMA. Best clues for next 200 point up or down move! And if traders are a bit weary leaving Thursday’s market “not in the mood”-notch it up to that time of month.
“I dominate break loops, giving mics men-e-strual cycles
Street’s disciple, I rock beats that’s mega trifle
And groovy but smoother than moves by Villanova
You’re still a soldier: I’m like Sly Stone in Cobra” From It Ain’t Hard to Tell by Nas
S&P 500 (SPY) 192.35 last week’s low held like nobody’s business. Now back looking at 197.50 the 50 DMA Subscribers: Pivots Positive
Russell 2000 (IWM) From Tuesday: “106.94-107.27 are recent lows (going back to February) Therefore, a close above and we might see some relief.” Darn was that ever true! Now, there’s 110 boom or bust
Dow (DIA) 169.10 is the 50 DMA to hold give or take a few ticks either direction. If it does, then Wednesday’s session goes into the history books.
Nasdaq (QQQ) 97.95 area key to hold with a move over 98.75 worth a follow
XLF (Financials) Held last week’s low and back in an unconfirmed bullish phase if holds 23.10
SMH (Semiconductors) Last night: “If holds and clears 49.50-a stretch, but anything is always possible.” LOL. Ok, now if holds 49.50 has to clear the 50 DMA at 50.60
IBB (Biotechnology) “Closed just beneath the 50 DMA. If there is a place to go long, even for a shorter time frame on a firming of the market, it’s here” Whoa, truer words never said-now has to hold the 50 DMA
XRT (Retail) Went up screaming and kicking-so now, has to settle down over the 200 DMA to be impressive
IYR (Real Estate) “This gets through 70.00 we can talk.” Let’s talk-has to hold it now
ITB (US Home Construction) Maybe double bottom-like to see even more evidence still
GLD Nutty day but ended up how I expected-firm and close to 118 resistance
Metals and Mining (XME) Gorgeous reversal candle if holds and confirms-GDX too
USO (US Oil Fund) The kind of pattern that could turn into an island bottom-could
FCG (First Trust ISE Reserve NatGas) Love this against 15.20 2012 and 2103 lows with the reversal candle if confirms
TAN (Guggenheim Solar Energy) Subscribers: Closed back in the channel and if holds around38.20 low risk trade
TBT (Ultrashort Lehman 20+ Year Treasuries) TLTs looked shaky til FOMC came out to play
UUP (Dollar Bull) 22.65 is the low of the most recent runaway gap
EEM (Emerging Markets) Boost here over the 200 DMA
FXI (China Large Cap Fund) Did what it needed to do. Now, 40.35 is the overhead 50 DMA
CORN (Corn) Subscribers: Nice run now too close to resistance
BAL (Cotton) Subscribers: Inside day on the3 50 DMA-interesting
SGG (Sugar) Subscribers: Over 44 looks really god
JO (Coffee) Subscribers: Still working that reversal candle unless it gets back over 42.00
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:
PANW Bounced off the 10 DMA which has to hold at 99.40 with R1 above at 104.11
Category 2: N/A
Category 3: (Double Up) Positive Phase, Condition 1 through 4, Positive Pivots which means can either buy an 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)
GILD Move happened before FOMC so was hesitant-now wait for an ORR to control risk
BMRN Bio tech like GILD but here because it has lots of room-prefer an ORR against 71.50-but near highs so if clears could miniswing
AAPL Good move over the 50 and 10 DMA—if holds 99.8- then good for an ORR or over 101.54-probably reports soon
PM 85.17 recent high to clear and probably should give this room to under todays low or 2 ATRs risk
BAC Cleared the 10 DMA and like with tight risk to todays lows if good and should clear 17.22
CYH Cleared the 10 DMA and a fave for 2014-like on an ORR or move over 56.31 risk to 55.00
MCK In healthcare just found out-like it now over 200 or an ORR and not in between-miniswing
Category 4: N/A
Phase Change:
FSLR Like a lot if clears 63.06 the 200 DMA especially that it held the 200 weekly moving average at 60.00-that’s the risk
LNKD Slingshot low if clears todays high then can use risk to around 200
BXP This either gaps over the 50 DMA and we follow or look for an ORR
SFM A fave and bounce off the channel. Like if holds 29.40 for the long haul to over the 50 DMA and beyond
TSLA 2 days negative pivots and if holds today’s lows then 259 level, over the 50 DMA with a move to 280 worth buying
NFLX over 467 should continue up if holds 458.25 the 50 DMA
Shorts: Need to see new setups-or whitecaps most likely
Category 5: N/A
Category 6: N/A
Best Best wishes for your trading,
Michele Schneider
