One nagging thought that just won’t go away is about the relationship between interest rates, the initial purpose of quantitative easing and where the market sits today.
The Federal Reserve switched to a policy of tapering last fall, which seemed so right. However, the clarity that they had when they first announced Operation Twist in 2011, then the QEs, followed by the taper appeared spot on to me. Now, not that I have any real right to criticize other than exercising my freedom of speech, I believe the FED has lost its way.
Thursday was the biggest drawdown in NASDAQ since 2011. Rates dropped again. Everything in me now says these low rates are the bubble ready to burst. Timing is everything of course-
S&P 500 (SPY) And to add insult to injury, volume was strong. Unconfirmed warning phase Subscribers: Negative Pivots in all
Russell 2000 (IWM) After failing to take out the 50 DMA Wednesday on a day when the Dow flew, here was the writing on the wall. Now, rallies should be meeker but what one should wait for end of week before another week filled with religious holidays
Dow (DIA) Unconfirmed warning phase
Nasdaq (QQQ) Sort of held Monday’s low so won’t be surprised to see Friday put in an inside day.
XLF (Financials) Under the 50 DMA again-now oversold
SMH (Semiconductors) Always the place to look should there be any buying left
IYT (Transportation) Barely holding that 50 DMA now
IBB (Biotechnology) tested and held the 200 DMA-another strong candidate for an inside day-but that doesn’t mean strength
XRT (Retail) Under the 200 DMA now
IYR (Real Estate) Still above the 50 DMA-another one to watch for any strength
GLD Unconfirmed bull phase but with lots of overhead resistance
USO (US Oil Fund) Inside day-good sign
TBT (Ultrashort Lehman 20+ Year Treasuries) Subscribers: What we will watch for in TBTs-a slingshot low with good volume or, a cross of the 10 DMA
EEM (Emerging Markets) Inside day
FXI (China Large Cap Fund) Subscribers: Maybe a slingshot high-has to confirm
CORN (Corn) Subscribers: Did not confirm a slingshot high which is a good thing for our long
FCG (First Trust ISE Reserve NatGas) Held up better but wouldn’t rush in
SGG (Sugar) Subscribers: 57.75 the 200 DMA to watch for a cross-will be watching this carefully
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) N/A
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)
***NOTE: My eyes will be on SGG, USO and TBTs mainly-not really into equities right here except playing out the 2 we have XRX and PM
SWC one of the few that has positive pivots and holding the 10 DMA making this a rare candidate if holds today’s lows and clears 15.60
CAT Held S1 neutral pivots but also a possible slingshot high unless today’s low holds
Category 4: (Rip Tide) N/A
Phase Change:
MPW Positive pivots converging moving averages with a great risk to 12.89. If good, could see 13.22 but that has to clear
Shorts:
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
CTXS If cannot clear today’s high see this longer term much lower. For now, has to break 55.06
CONN 39.97 max risk inside day with room to 34.00
BIIB Big risk so thinking day to mini but if cannot clear 293 area, see a move to 267 the 200 DMA
DISH Broke the 50 DMA and now 60 area good risk with a move to 54 and possibly lower
TIF 87.75 max risk with next support 83.50
TWC Broke the 50 DMA and now today’s high good resistance. See drop to 130 and maybe 125 later on
Bye For Now!
