Everybody scream!!! Okay, now that we got that out of the way, we can exorcise all those demons that keep us expecting the market to either break down or up out of the trading range and in recent history, the trading range within the trading range.
That’s not to say that there aren’t individual stocks that are on their own trajectory. But, looking strictly at the macro picture, the Market Tonefluctuates daily from short-term negative to positive, intermediate term-slightly positive to more positive and long-term, lower and higher degrees of only positive.
How many ways can I use figurative language and metaphors to tell the story of the Market 2015? To review-sheep, goats, rams, Shepherds, pastures, wolves, airplanes and cruising altitudes, episodes of Mr. Ed, The Simpsons, Monk to the cast of my Economic Modern Family, everything brings me back to this-TRADING RANGEabounds, until we get something more than a one day move to confirm that the trading range has broken either way.
Tuesday, our Granddaddy Russell 2000s took us from seemingly entering the abyss by breaking down under the 50 Daily Moving Average early on, to returning back above it. And, he had help from sibling KRE-the Regional Banks Sector ETF. That stayed green all day even before IWM followed in kind.
So what did the rest of the family do? In the spirit of dancing the dosey-doe and taking turns as leaders or laggards, they scattered away from one another a bit, but ultimately kept the family in check as a whole.
Retail (XRT) faltered a bit sitting on the 50 DMA after a weak consumer confidence number. Semiconductors (SMH) held the bullish phase.Biotechnology (IBB) entered an unconfirmed warning phase (needs a second day to confirm that change) and Transportation (IYT), although well below the 50 DMA, had a decent bounce off of the 200 DMA and cleared the fast moving average.
As we came into this week watching to see if any of those groups could catch fire and if the Russell 2000s might take out 2015 highs, at this point, we remain breathlessly watching.
Finally, the cruising altitude of the Dow at 18,000 hit turbulence, but happily, we did not have to assume the crash position. (Unless you were long Twitter, which illustrates the Agony and the Ecstasy of Social Media as the earnings announcement to their Investor Relations page was posted prematurely and subsequently tweeted.)
S&P 500 (SPY) Held the 50 DMA perfectly and closed on the intraday highs. 212.17 is the pivot to clear and Tuesday’s low the point to hold Subscribers: Negative Pivots in all
Russell 2000 (IWM) Returned over 125.12 keeping hope alive
Dow (DIA) Chart and range intact for now.
Nasdaq (QQQ) We escaped the fate of an island top. Like over 110.68
XLF (Financials) Closed right over the 50 DMA giving us a confirmed phase change back to bullish. Fins have been a reason why the market is not currently trading much higher.
KRE (Regional Banks) Inside day over the 50 DMA. Long term still very friendly here, even when it gives us pause
SMH (Semiconductors) Confirmed phase change to bullish
IYT (Transportation) 160 the point to clear 156 the point to hold
IBB (Biotechnology) Unconfirmed warning phase but right into March low support
XRT (Retail) Unconfirmed warning phase but right into April low support
ITB (US Home Construction) A possible reversal candle if confirms-good risk too if it does
GLD (Gold Trust) Watch the metals to see if this bounce is real. I have been thinking that gld and slv are basing.
GDX (Gold Miners) Finally got the close over 20.00 and then some.
USO (US Oil Fund) Consolidating just over the 100 DMA. Needs to hold 18.25 and clear 20.29
OIH (Oil Services) Consolidating and worth watching
XLE (Energy) Consolidating and worth watching
TBT (Ultrashort Lehman 20+ Year Treasuries) The Interest Rates should remain choppy with a good possibility of a rate rise, but with no real commitment on that as yet
UUP (Dollar Bull) Oversold and probably worth looking at for a bounce off of the February breakout levels
EEM (Emerging Markets) Closed on another new 2015 high
EWY (South Korea) Consolidating after last week’s gap higher
BAL (Cotton) Futures look good and even better over 68.00
SGG (Sugar) Futures held above the 50 DMA and for the first time since 2010 look like its bottoming
PHO (Water) Worth watching if closes over 25.55 for a long term swing long
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
***Market Tone: Short-term Neutral 0, Intermediate-Term Positive 5, andLong-Term Positive 6, aggregate makes it a positive 11. Still in a trading range within a trading range but with a cautiously neutral to positive tone, especially with short-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 Good turn up over the pivots and now has to clear 76.67 R1 and hold today’s lows
GE If can hold around 27.00 down to 26.50 like for a move higher swing
Category 4:N/A
Phase Change:
MRVL Watch for a 2 day brick wall pattern with a great stop under 13.73 the 80 monthly moving average
YOKU Inside day against the 200 DMA and still in play although a bit overbought on weekly RSI
ONVO Like the base and the close at 5.00. Over R1 5.14 like with a swing risk to 4.65
BBRY 10.14 support to hold if clears 10.46
EMC Risk to 26.60 the 10 DMA and look for an entry on a 5 minute OR or an ORR
SLB Just under the 200 DMA. Like over 93.57 with risk to 91.00 for swing
MU Although it did not rally, it did hold the 50 DMA keeping this here for a move over R1 29.38 risk to today’s low
Shorts: HOG and DISH on focus list
Category 5:N/A
Category 6: N/A
Best Best wishes for your trading,
Michele Schneider
