For what it’s worth Mondays have been a high probability day for the Bulls for most of this year and today seemed to be following that trend in the morning. Unfortunately even IWM breaking its all-time high levels could not entice the DIA, QQQ, or SPY to continue higher. In fact, the divergence between the IWM’s Opening Range Breakout and other 3 markets was a very timely indication that the markets needed a rest after last week’s move up.
The intraday reversal would not be as concerning were it not for the fact that all four indexes are sitting at very significant resistance points. At times like this, when the markets have trended higher for at least several days, I like to look for the break of the prior day low as the first sign of potential weakness or change in the short term trend.
The SPY came pretty close to breaking its prior day low, but the others held firm. Regardless, if you look at the Little Big View basic sector summary you’ll find that only retail (XRT) and the Financials (XLF) closed up on the day. So it was a profit taking day across the board.
Unfortunately for the Bulls, Tuesdays have generally been weak this year. Let’s hope earning news can help buck that trend tomorrow.
S&P 500 (SPY) Rallied into resistance at 210.63 and then failed to hold 209.35 as support. 208 now strong support to hold at the 50 DMA Subscribers: Mixed Pivots, Positive in IWM and QQQ, Negative in DIA and SPY
Russell 2000 (IWM) Put in a new all-time high at 126.39 then sold off to close at the lows. 125.60 now support to hold.
Dow (DIA) Failed to hold over 180.16. Next key support is at 179.00 the 50 DMA and 181 is the point to clear.
Nasdaq (QQQ) Corrected like the rest of the market. Now needs to hold 107 and clear and close over 108.20
XLF (Financials) Cleared and held over key resistance at 24.30. Now 24.24 Key support.
KRE (Regional Banks) Reclaimed its 6 month calendar range high at 41.06 and cleared resistance at 41.20. Now needs to clear 41.62 and hold 41.06
SMH (Semiconductors) Held support at the 50 DMA. Now needs to hold and close over 55.82 and then 56.73 the next resistance.
IYT (Transportation) Needs to continue to hold at 155.65 the 200 DMA
IBB (Biotechnology) Found resistance around 362. Now needs to clear 362.93 and then 363.63 to really get going.
XRT (Retail) Consolidating near the highs Needs to first clear 102.22 (Monday’s high) and then 102.50.
IYR (Real Estate) Needs to hold support at 76.30 area now, or else see a visit down to 75.75 the 200 DMA
ITB (US Home Construction) Held nicley at S1 today. Under 27.83 spells trouble.
GLD (Gold Trust) Gapped lower and then failed to reclaim the 50 DMA at 115.54 next support at 114.50 area
USO (US Oil Fund) After Friday’s inside day this gapped higher only to sell off and chop around holding PDH on the close
OIH (Oil Services) Chopped like USO. Now needs to hold at 35.51 and clear 37.00.
XLE (Energy) 78.70 support at the 10 DMA and over 81.00 looks great.
XOP (Oil and Gas Exploration) Somewhat range bound until it can clear 54.21
UNG (US NatGas Fund) Another all-time low close!
TAN (Guggenheim Solar Energy) Can’t be stopped! Or at least for now. Like to see what happens between 50 and 51.07 area
TBT (Ultrashort Lehman 20+ Year Treasuries) Sandwiched between the 10 and 50 DMA’s
UUP (Dollar Bull) Digested with the rest of the market. As long as this can hold at 26.00 see a move higher still
EEM (Emerging Markets) Possible reversal candle, needs a second day to confirm
EWP (Spain) Found resistance at 35.40
EWW (Mexico) 58.61 next support
FXI (China Large Cap Fund) possible reversal candle, if confirms.
EWY (South Korea) Failed to hold the 200 DMA at 59.51 giving us an unconfirmed phase change back to recovery.
CORN (Corn) Over 26.00 gets interesting
SGG (Sugar) 13.00 in cash is still the next place to clear
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 0, Intermediate-Term Positive 4, and Long-Term Positive 7, aggregate makes it a positive 11. Still in a trading range within a trading range but with a bullish tone for longer term trades. Neutral tone for short term lets pivot rules dictate our daytrade bias 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)
MS Reports 4/20 Inside day over major moving averages. Like for an ORR against 36.22
SWI made its range in the first 30 min and closed on the lows. Like if holds 51.75 for either an ORR or a move over 52.58
Category 4: N/A
Phase Change:
CMC Still compressed against the 200 DMA t 16.16. Like if can clear 16.26 with risk down to 15.40 area for a swing
PNRA Inside day, Needs to hold todays lows and clear 166.15
BZH Still like best for an ORR against 18.20 area with risk to 17.64 for a swing. Even more so now that we have room in the portfolio for swings.
CAT Confirmed Phase Change to Recovery with an inside day sitting right on the 80 monthly moving average. Like either on an ORR against 81.84 for a day to miniswing or a move over 82.80 for a hybrid to swing
CIEN Inside day just under the 50 DMA. Like over 20.13 with risk to under PDL for a miniswing or down to 19.49 area for a swing
Shorts: Focus List: EBAY, VNO
Category 5:N/A
Category 6: N/A
Best wishes for your trading,
Jonathan Griffin, Assistant Dir. of Trading Research & Education
Geoff Bysshe, President
