Island top in S&P 500, which I have been writing about since last Friday, got some legs today. Once the SPY gapped lower this morning, especially after the Venus Fly Trap warning, the writing was on the wall. Now, although the bull phase remains intact, the potential test of the underlying 50 daily moving average seems likely. NASDAQ is much closer to the 50 DMA which also makes sense given the lackluster performance it has had since the year began. The small caps (Russell 2000), which have led the rally up, continue to have the best chance to show the way-either failing at the 93.00 level or returning above today's high and bringing confidence back to the buyers. Cash is the best place to be for the active investor right now.
S&P 500 (SPY) Subs: Best indicator is whether or not the return to the channel breakout from March 5th holds up-there is a gap low there as well at 153.64. Long SDS ½ position since got ½ ATR
Dow (DIA) Has room to the March 5th low 141.69. That was the low on the gap up day that resumed the rally until last Friday. Good area to watch now
NASDAQ 100 (QQQ) 67.50 (the 50 DMA) is key to hold and 69.00 the area to break above
ETFs:
GLD Rallying on fear in the marketplace. Could see the 50 DMA overhead as resistance and if this begins to sell off, would take that as a positive for the overall market.
XLF (Financials) 17.87 is the March 5th low to watch for
IBB (Biotechnology) Brick wall high in place, but would not count this out as best chance for a comeback if market stabilizes
SMH (Semiconductors) Unconfirmed warning phase with some support at 34.50 Subs: Took the small loss and now will be real patient for jumping back in
XRT (Retail) Like biotech, the best one to watch for a long if things stabilize, or if can hold around the 69.00 level
IYT (Transportation) A move down to 107 would be very tempting to buy. Aside for now
IYR (Real Estate) Best performer today. Hammer candle so one to watch tomorrow for either a move back up or failure to the 50 DMA from here
USO (US Oil Fund) Chaotic chart
OIH (Oil Services) Had a shot but now looking heavier
XLE (Energy) Another sloppy chart here
TBT (Ultrashort Lehman 20+ Year Treasuries) Back to unconfirmed warning phase. Subs: Aside here now as well
XOP (Oil and Gas Exploration) Correction time since it never cleared the channel on the weekly chart although watch for support around 60.00
XHB (Homebuilders) Brick wall possible after looking so promising
UUP (Dollar Bull) 22.64 key
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) N/A
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:
STX Holding the 50 DMA at 34.13 which means a good risk to trade off of if this can take out R1
PTEN Inside day which means max risk 23.65. If can clear the 10 DMA still could have some legs
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)
ACT Today's low is max risk but unless this clears 91.00 not madly in love
SPLK Like over 39.00 with today's low a good risk.
AOL Good move today bumping now into the 10 DMA so if market is under pressure and this cannot clear, caution. However, would consider a reversal against S1 or pivots
AMGN Inside day making today's low max risk-looks like it could go higher now that is is over the weekly Bollinger Band
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:
AIG On the 50 DMA and oversold which means has to hold today's low and cross R1.
MBI If this holds 11.00, might see a pop back up to 12.00. Low risk day to miniswing trade
Phase Change: MJN Good move but would now only consider an opening range reversal. FDO After a big day yesterday, had an inside day in the recovery phase. 59.12 a good risk now
Shorts:
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
ALXN Today's high good risk as the 5o DMA begins to slope down. 91.00 some support
JWN More daytrade, but after 2 inside days, if breaks today's low could see another flush to the downside
SPG if the housing sector is weak, this under today's low and S1 could bring it to the 200 DMA and possible lower. Risk today's high
EL Inside day. Risk today's high. Has some support at 62.00 then not until 60.00
MDVN 46.47 resistance and 44.25 recent lows to break
Bye for Now!
