Thursday, we enjoyed cruising at 18,000 plus in the Dow. And even though the flight attendants told us that the Captain turned off the seatbelt sign, notice they also added, when seated, we suggest you leave your seatbelt fastened, in case of turbulence.
What could create turbulence now? Poor earnings coming out of the big guns likeAmazon, Google and Apple for starters. More news on the already stormy situation in the Middle East. Doubtful the Federal Reserve will do much to rock the boat, although as I keep writing, a modest rate rise seems likely and logical. Let’s face it, Gremlins come in many forms.
The 2015 metaphors, which began as fun ways to describe the market, have become so comfortably familiar and pretty dead on, let’s go through a quick review using the vernacular.
Economic Modern Family check: Russell 2000s, although not as strong as the SPY orQQQs on Thursday, do appear to at least, be holding their own. So typical that the Semiconductors and Biotech ETFs show up when their needed to support the family, then rest when other sectors/groups take charge. Retail is basing out at these higher levels with more work to do. Regional Banks, hung in there with an inside day and still have my conviction that they are a great long term play for more upside.
Transportation did exactly what we anticipated it would do-rose into overhead resistance at the 50 and 100 Daily Moving Averages. I suspect Friday, it will deservedly rest and consolidate with an inside day.
The final metaphor, sheep and sheep pastures, suggests that as the indices have just visited the top of the trading ranges, they will remain safely within the boundaries of the herd rather than bust out or scatter too far beyond those boundaries at this time. However, do remember that even at cruising altitude, it pays to know where the exit signs are, just in case.
S&P 500 (SPY) Cleared but could not close above 211.27 the March 3rd high, typical of this year’s action. Subscribers: Positive Pivots in all
Russell 2000 (IWM) Closed over 126.25 but could not clear the all-time high at 127.13, support down below at the 50 DMA 123.66
Dow (DIA) Confirmed Phase Change Back to BULLISH, 181.67 a huge point to clear with 178 key support to hold
Nasdaq (QQQ) Cleared the recent high of 109.42 but could not hold at that level on the close. 109.55 now resistance to clear and support at 107.73 the 10 DMA
XLF (Financials) Closed right on the 50 DMA giving us an unconfirmed phase change back to bullish. Needs to hold 24.24
KRE (Regional Banks) Inside day on the 10 DMA, key resistance at 41.95 and support at 40.76 the 50 DMA
SMH (Semiconductors) Gapped lower on the open and held support at the 50 DMA
IYT (Transportation) Getting some traction now over the 200 DMA with a nice rally to the 100 DAM at 160.17
IBB (Biotechnology) holding nicely over the 10 DMA at 360.59, next resistance is at 374.97
XRT (Retail) Back into the trading range between 100 and 102.50. Strong support at the 50 DMA at 99.52
IYR (Real Estate) Key support at 77.00 and needs to clear 78.20
ITB (US Home Construction) Big gap lower on the open yet held support at the 100 DMA at 26.57
GLD (Gold Trust) Unconfirmed recovery phase with an inside day. Still holding key support with overhead resistance to clear especially over 116.25
GDX (Gold Miners) Rallied to the 100 DMA with an inside day
USO (US Oil Fund) Consolidating just over the 100 DMA. Needs to hold 19.21 and clear 20.29
OIH (Oil Services) Today’s low now good support to hold
XLE (Energy) 83.23 resistance to clear and 81.53 support to hold
TAN (Guggenheim Solar Energy) Into resistance now around 50 to 51.07
TBT (Ultrashort Lehman 20+ Year Treasuries) Held the 50 DMA with a inside day
UUP (Dollar Bull) Broke the 50 DMA giving us an unconfirmed warning phase
EEM (Emerging Markets) New 2015 high
EWP (Spain) Resistance at the 80 monthly at 36.32
EWW (Mexico) Watching this to get back over 60.00
EWG (Germany) Resistance at 29.73 the 50 DMA
RSX (Russia) 20.05 key resistance
BAL (Cotton) Futures gave a very nice move off of the 100 DMA
DBC (DB Commodity Index) Subscribers: 18.41 will be the next strong resistance 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 Positive 2, Intermediate-Term Positive 4, and Long-Term Positive 6, aggregate makes it a positive 12. 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)
RAI Like for an ORR against 76 for a day to mini
PNRA Reports 4/28 Inside day like over 183.56 for a daytrade
KSS Reports May 14th Like now more for an ORR against the 10 DMA With swing risk under the 50 DMA
JPM Like if holds todays lows and clears 62.90 for a swing
Category 4: N/A
Phase Change:
EMC Like if holds 26.37 and clears 26.92. Risk to the 26.32 area
CMC Reports June 25th Still like for an ORR against the 200 DMA with risk to 15.40 area.
PM like if holds todays lows and clears 84.32 R1 with swing risk down to 82.21 area
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 only now with risk to 70.26
Category 6: N/A
Best Best wishes for your trading,
Michele Schneider
