After reviewing my comments from Monday night I thought to myself, “Mish, how can you tell folks to be long gold at the same time you are telling them that you believe the Federal Reserve will begin to nominally raise rates? Isn’t that counterintuitive? Huh?” (Yes, these sort of questions do keep me up some nights!)
But then I thought that if 18,000 in the Dow continues to terrorize the bulls and the Diamonds or DIA break down back under 179.15, what would 2 feasible explanations be? Rising rates and Geo-Political fear (coming in the form of Iran perhaps)? Wouldn’t that work out as positive for gold nonetheless?
Tuesday’s session saw a rise in both interest rates and gold. The Dow did test then fail 18,000 and DIA went back to an unconfirmed warning phase. It’s enough to make a Shepherd woman’s head spin!
And what about my so-called Economic Modern Family? The one that has remained intact, holding each other up in check, not letting anyone stray too far?
The Russell 2000s filled the gap they left from last Friday. Otherwise, not much to say other than trading range. Semiconductors returned to an unconfirmed bullish phase, which is good. Otherwise, not much to say other than trading range. Retail confirmed the return to a bullish phase. Otherwise, not much to say other than trading range. Biotechnology filled the gap from the scary price action from March 20th. Otherwise, not much to say other than trading range.Regional Banks are closing in on the top of its recent trading range. But, the operative words for now-trading range.
Finally, Transportation, which was the first to fail earlier this month and break its 3-month trading range, is now back over the 200 DMA, back into the original low of the range established in January and definitely keeping bears more tentative.
Not much has changed as far as our approach to the market. We are mainly focused on instruments that were beat up in 2014 and are basing in 2015 for swing longs. Momentum instruments have our attention with tighter risks and quicker profits. Emerging megatrends fascinate us the most, such as the growing need for cyber security, solar energy, but especially the expanding debate on legalizing medical and eventually recreational marijuana.
S&P 500 (SPY) Confirmed Phase Change Back to Bullish Subscribers: Positive Pivots in all except DIA
Russell 2000 (IWM) Over 126.25 better and support down below at the 50 DMA before we say game changer
Dow (DIA) Unconfirmed Phase Change Back to WARNING
Nasdaq (QQQ) Confirmed Phase Change Back to Bullish-over 108.40 better if holds the 50 DMA
XLF (Financials) Under 24.04 could see the 200 DMA next
KRE (Regional Banks) Next close over 41.74 excellent. Support down to the 50 DMA now
SMH (Semiconductors) Unconfirmed bullish phase. 56.80 place to clear next if can hold up Tuesday’s lows
IYT (Transportation) 158 is the place to clear then it will be really hard to say negative things about the overall market
IBB (Biotechnology) Big brother and champion!
XRT (Retail) 102.50 place to clear for a new leg up but has to hold 97.00 on the downside
IYR (Real Estate) This does look like it will visit 75.87 the 200 DMA.
ITB (US Home Construction) Departed from the real estate ETF by working its way back over the 50 DMA. Has lots of resistance though overhead
GLD (Gold Trust) Unconfirmed recovery phase. 114 support and 116.30 next resistance point
GDX (Gold Miners) Once this closes over 20.00 (it didn’t), see around a 2-3.00 move up
USO (US Oil Fund) Corrected to a decent support level so assuming setting up for a new long
XLE (Energy) After the basing action, has follow through with the 200 DMA above looking like its calling its name
TAN (Guggenheim Solar Energy) May never get a correction with a good risk again!
TBT (Ultrashort Lehman 20+ Year Treasuries) TLT’s Held the 50 DMA. 128.84 support to hold now
UUP (Dollar Bull) Held the 50 DMA at 25.57
EWW (Mexico) Watching this to get back over 60.00
DBC (DB Commodity Index) Subscribers: Over 17.84 like for a swing risk to 17.60
JO (Coffee) Could be basing out if clears the 50 DMA low risk trade
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. Unchanged from Monday. 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 risk to 60.62 and over 61.73 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
YUM All time high 83.58 which means if gaps up after its good earnings that is a runaway gap to trade
LO Has to clear 71.24 the recent highs and if gets volume, good day to swing trade
PNRA Risk to 180 and consolidating after huge gap higher. Can see 190 before earnings 4/28
Category 4: N/A
Phase Change:
VZ Good comeback after a weak start. Like now over 49.57 R1 risk to 48.90 area
SINA Reports May 24th Tight risk to 35.46 the 50 DMA and like it over 37.07
EMC Reports before market open. 25.50 max risk but worth watching as 2015 pick.
CMC Reports June 25th If holds 15.35 and clears 15.95 would take another shot long since the weekly and monthly charts look good
PSX earnings on 4/30. Good for a miniswing if holds 78.15
BBRY Reports June 21st Converging moving average over 10.16 with then a good risk to 9.68
Shorts:
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
DTV Here is one I know at some point will fail-just a matter or risk/reward. Reports May 5th. Resistance to trade against is 87.55
UA Was a 2015 short pick that has rocketed until today when it had a brick wall high. R1 is resistance 84.93 with a move to the 50 DMA at 78.57 not out of the question
Category 6:N/A
Best wishes for your trading,
Jonathan Griffin, Assistant Dir. of Trading Research & Education
Geoff Bysshe, President
