Striking how the current trading range in the indices remained as such during our week long vacation. After all, before I left, I did send a reminder that “Everything pretty much continues to trade in a range of its own, chopping around, with the occasional slaughter or clean getaway (until realizing it’s now separated from the herd. Then it finds its way back to the herd or the range).”
I further left you all with, “We see a lot of rotation, but the family basically remains intact, holding each other up in check, not letting anyone stray too far.”
So here we are, back to the Range, Herd, and Economic Modern Family. We strayed, neither for too long nor too far!
Now that earnings season kicks into high gear, I cannot imagine writing anything better to reflect how I continue to see the market for the time being.
However, since I’m rarely at a shortage of words, I will add a few thoughts:
1. Rates - On April 9th I was interviewed on Benzinga.com and stated that the clear path for the Federal Reserve was to raise the rates, even if it’s just by a bit (which would be logical.)
2. Oil - When asked on that same broadcast what I thought about oil, I told them I thought it was basing-clearly that has been the case.
3. Gold - 114 is the support area I thought should hold. So far it has, which makes me think the double bottom at 110 is good and a move higher from current levels likely.
With the Dow over 18,000 I could go back to the Simpson’s reference regarding Terror at 18,000 in the Dow. (MMMDaily, Treehouse of Horror IV written on 3/30/15). Interestingly, DIA just regained momentum over the January 6-month calendar range high during Monday’s session. That makes Monday’s low 179.15 key support to avoid a new terror at 18,000 and deja vu all over again!
Thanks so much to Geoff Bysshe and Jonathan Griffin for covering while Keith and I had fun in Caribbean!
S&P 500 (SPY) Unconfirmed Phase Change Back to Bullish Subscribers: Positive Pivots in all
Russell 2000 (IWM) We can call 126 pivotal with support down below at the 50 DMA before we say game changer
Dow (DIA) Unconfirmed Phase Change Back to Bullish
Nasdaq (QQQ) Unconfirmed Phase Change Back to Bullish
XLF (Financials) Confirmed warning phase but with an inside day as it seems to await more earnings in this group
KRE (Regional Banks) Inside day. Looks healthy-more like a chop fest til it clears recent highs
SMH (Semiconductors) Confirmed warning phase but did rally just to under the 50 DMA
IYT (Transportation) 158 is the place to clear then it will be really hard to say negative things about the overall market
IBB (Biotechnology) Inside day with 363.63 has to clear now for more bullish flow
XRT (Retail) Inside day and back over the 50 DMA so let’s say more testing the bottom of the range and holding
IYR (Real Estate) This does look like it will visit 75.87 the 200 DMA.
ITB (US Home Construction) Inside day and confirmed warning phase. Housing not where it’s at right now which is probably because of the rate increase possibility
GLD (Gold Trust) Over 115 would take a shot long with a risk under recent lows
GDX (Gold Miners) Once this closes over 20.00, see around a 2-3.00 move up
USO (US Oil Fund) A close over 20.00 this looks really good
OIH (Oil Services) Inside day
XLE (Energy) After the basing action, has follow through with the 200 DMA above looking like its calling its name
TAN (Guggenheim Solar Energy) Now I will wait for a move down to 43.00 since risk/reward is out of whack
TBT (Ultrashort Lehman 20+ Year Treasuries) TLT’s Inside day
UUP (Dollar Bull) Held the 50 DMA at 25.57
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
***NEW: Market Tone: Short-term Positive 2, Intermediate-Term Positive 4, and Long-Term Positive 5, aggregate makes it a positive 11. Still in a trading range within a trading range but with a positive tone for short-term trades and a bullish tone for longer term trades. NOTE: Market Tone is updated before the open each day and reported to you on twitter.
Category 1: N/A
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)
ADSK Bullish Phase today with risk to 59.70 and over 61.50 clears the 10 DMA. Like for a mini to swing Reports May 14th
RAI Over 76.00 this is worth holding onto for move to maybe 84-85.00
VZ Will report before the open. Great consolidation with risk under 49.00 and like a lot if clears 50.00
EA Reports May 5th. Like this against today’s lows for a miniswing trade to see if it can get to the highs.
KSS Reports May 14th. Inside day. Like over today’s highs and R1 which line up with risk to under 73.94 the 50 DMA
PAY Reports June 14th Converging moving averages which it cleared. 35.00 good swing risk with either an ORR or a break okay to look for
Category 4: N/A
Phase Change:
IBM Reported and now over 165.60 looks good for basing going back from October 2014
PSX good day with earnings on 4/30. Good for a miniswing if holds 78.16
BBRY Reports June 21st Converging moving average over 10.16 with then a good risk to 9.68
THC Made its move in the first 30 minutes then consolidated. Over 51.50 to 51.65 like for a day to mini with earnings May 4th
ONVO Over the 50 DMA or 5.01 looks good for a bottoming formation. Reports June 11th
Shorts:
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
DISH Reports May 7th Under S1 like to see if it can break 68.63 the 200 DMA-miniswing
GILD This looks really heavy as a 2015 short pick. Reports April 30th so a daytrade to mini if cannot clear 101.30
Category 6: N/A
