A market in momentum, right? Breaking News-“Dow and S&P 500 finish at record highs as investors hope Fed will continue stimulus; Dow adds 171 points, S&P up 1.4%.” It’s been awhile since I’ve written about the technical bubble-but let’s revisit. Take the small caps, Russell 2000-my particular favorite “tell.” If you locked yourself in a closet with a computer and watched no news at all, on May 22nd, you would have seen the reversal from the all-time highs on super good volume and liquidated longs, maybe even looked for shorts. Then, on June 25th, you would have seen that the day prior it exhausted the correction with again super good volume and followed through with an up day. Back long. Then, on June 27th, you would have seen the confirmed phase change to bullish-more long. Currently, you’d be looking for topping action and without ever hearing one word from the Fed or hopeful investors, you’d be sitting pretty, taking profits and looking for signs that the party is over. Therefore, the bubble in the punchbowl (or the closet if you will) is where the best traders live!
S&P 500 (SPY)169.07 that same May 22nd high that Russells took out days ago. Either a place that wil haunt us or yet another platform
Russell 2000 (IWM) Gap lower would be suspicious but if not, digestion would be healthier
Dow (DIA) )155.14 the May 22nd high
NASDAQ 100 (QQQ) Took out the May 22nd high and we like to see leaders lead
ETFs:
XLF (Financials)20.35 the 2013 high-big earnings here coming up
SMH (Semiconductors) Confirmed phase change to bullish with 39.29 the 2013 high to clear
XRT (Retail) wow!
IYT (Transportation) Lagging-a sign of pending weakness, or just needs to play some catch up?
IBB (Biotechnology) The darling still the darling and on new highs
IYR (Real Estate)Inside day with67.40 the 200 DMA to clear
XHB (Homebuilders) Loves the hopes for continued low rates-but still has overhead resistance making this a place to watch should Fed get to talking tapering again
GLDGlorious trade this week-now looking at 126 level if can hold today’s lows
USO (US Oil Fund) Subscribers: Start of a brick wall high if confirms meaning we will look at a possible short
OIH (Oil Services)Not a brick wall high but some issues trying to get to 2013 highs
XLE (Energy) Ditto to OIH
XOP (Oil and Gas Exploration) Like this better if can clear 61.82
TBT (Ultrashort Lehman 20+ Year Treasuries) 74.50-74.73 daily chart support
EWG (Germany) Subscribers: Took 1/3 off and now looking for move to the 50 DMA
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
**NOTE: New and Old Subscribers: I do not include on the list 1. Anything with a weekly or daily RSI over 92 2. Anything within 4 days of reporting earnings 3. Anything with a risk over 1 ATR from its current close 4. Anything with only one day under the Floor Trader Pivots (unless specifically noted. 5. Anything with a potential slingshot or brick wall high (new 60 day high, close in the bottom 25% of the intraday range.
**NOTE: CIEN up 10% today!!
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:
GME Has to clear 43.31 now to see 46, a reasonable target. 42.30 key support
MGM 3 day correction. 15.05 good risk point and has to clear the pivots then today’s high then 15.95 to see 16.50 or higher
Category 2: (Pipeline) N/A
Category 3: (Double Up) Positive Phase, Condition 1 through 4, Positive Pivots which means caneither 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)
GCI Reports July 22nd. Needs one more push over 26.75 ahead of earnings
MNST Improved in condition. If holds today’s low could see move higher but also has to clear 61.37
Category 4: (Rip Tide) N/A
Phase Change:
HOG Reports July 25th On the 50 DMA and needs to confirm the phase change. Today’s low max risk
MAS Reports July 29th. On the 50 DMA and needs to confirm the phase change. Today’s low max risk
BIIB Made the whole range in the first 30 minutes. Now, if holds 220.87 S1 could still see 247
LEN Great move today-now a reversal would be preferable
KBH 18.60 a good point to hold if this has more to the 50 DMA
MBI Inside day under the 50 DMA but holding in a range. Over 13.63 takes out Wednesday high. Risk 13.14
TRIP Reports July 24th. Under the 50 DMA but held recent lows 59.54. Has to clear 61 then R1 to get going again
Shorts:
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
CXO Was on long list but now failing and could be a good place to go if cannot clear 89.50
Category 6: White Cap-Having a 2-3 Day correction over the pivots. In a Negative Phase, Positive Pivots. Can sell an Opening Range High Failure if happens below R1 or previous day high whatever is higher and/or weakness if breaks S1 and prior day’s lows
DVN Under S1 breaks down under the moving averages. Risk would be today’s high
Bye for Now!
