Lots of traders, myself included, have spent the last 1-2 years using the small caps (IWM) as the major barometer of health/weakness of the overall market. Twitter has had a plethora of warning tweets about the concern in this index as the main reason to be cautious on any longs. Tweets of WARNING light up my screen daily. However, like with all cycles of nature, perhaps the warning is simply to not be into small cap stocks period. Perhaps, they have little to do right now with what also seems obvious-the move into big industrial companies. And what about public perception? Is John Q. Public sophisticated enough to understand the discrepancies or is he merely happy to know one thing as he calls his broker to buy: The Dow is on new highs!
S&P 500 (SPY) Gapped higher this morning and closed on new all-time highs! Not overbought. Regardless of weakness in some sectors and groups, the breath of the market is behind this. Subs: Pivots Positive
Russell 2000 (IWM) As a major barometer for quite some time now, the small caps have passed the baton to SPY and the DOW (the biggest industrial companies). After big gains in March with the trend still positive, I wouldn't say this is a trend reversal. But most likely a correction to the 50 DMA. Subs: Approaching oversold conditions in the daily.
Dow (DIA) Gapped high this morning and closed on all time highs. No bad news here! Subs: Pivots Positive
NASDAQ 100 (QQQ) With a close over the 69.00 resistance level, we have a new high close for 2013! However, it needs to break free from this herky-jerky movement to really give me confidence in this index.
ETFs:
GLD Yikes. This gapped lower and closed on the lows. 151.40 some support. Not surprising with positive, confident action in indexes.
XLF (Financials) Inside day, back over the 10 DMA. Needs to clear 18.30 to get moving.
IBB (Biotechnology) Closed at new all time highs but, is beginning to get extended.
SMH (Semiconductors) Confirmed a weak warning phase. 34.50 level is support. Subs: 35.00 area pivotal
XRT (Retail) Inside day. Still clinging to the 10 DMA, but needs to clear the double top at 70.81.
IYT (Transportation) 108.69 did not hold. Gap still in place from March 5. Subs: At this point, with bull trend intact, I see this as a gift for a lower priced entry.
IYR (Real Estate) New 2013 high, but approaching a hurdle around 70.00. Which lines up from highs made in early 2008.
USO (US Oil Fund) Consolidating in its new bullish phase. Holding the 50 DMA.
OIH (Oil Services) Inside day. Back to weak warning phase Subs: Did not close over the 80 monthly in March.
XLE (Energy) May be correcting down to key support at the 50 DMA.
TBT (Ultrashort Lehman 20+ Year Treasuries) Inside day. Could be finding some support. Subs: R1 and today's high line up. Although, ultimately want to see this over 66.00.
XOP (Oil and Gas Exploration) Unconfirmed weak warning phase. Subs: Possible buy opportunity over the 50 DMA.
XHB (Homebuilders) Brick wall high. Most likely headed to the 50 DMA at 29.00.
UUP (Dollar Bull) Golden Cross forming. Needs to get through 200 weekly MA.
FXI (China) Subs: Watch to see if this returns over the 200 DMA with 36.00 a great point of support. Looking for swing entry over today's high and the 10 DMA.
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) Positive Phase, Condition 1, 2 days under the FTPs, Risk to Previous Day low, Can buy ½ over FTP and ½ over R1, Target- Day to at least 3 ATRs from entry:
HOT 61.92 max risk. Like to see the pivots to clear for half position, other half of position at R1. 66.00 target.
MUR Inside day. Good risk to 62.96. If it can clear 63.90, should have another leg up.
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)
QCOM Inside day. Max risk 65.60. If clears R1, looks poised for a swing.
M Inside day. Needs to clear 42.20 and hold Monday's low.
MMM Needs to clear 106.88. When buying new highs, the risk is key. Therefore, use either S1 or the pivots. Good for swing since not overbought.
AIG S1 is good risk if this clears 39.00 convincingly. 41.42 target.
DIS Today's low is good support and max risk. Looks poised for new highs with target at 59.50.
C Max risk 43.80. Needs to clear Tuesday high which lines up at R1.
Category 4: (Rip Tide) Oversold (2 or more days under FTP), Condition 4, Needs to clear R1, Risk previous day low unless noted differently, Target- Day to at least 3 ATRs from entry:
OI If 26.00 holds, with an inside day, would look to be a buyer above 26.76.
PRU If this holds the 59.00 level, looks good. Has a shot to move with the financials, if they can take off.
Phase Change: MBI Held the 200 DMA and is oversold which tells me over the 50 DMA 10.44 overdue for a good pop COH Needs to clear 51.00 to get going. BIDU If holds today's low and S1 has potential to move up. Can buy reversal or breakout. ESRX Held the 200 DMA and closed over the 10DMA. If holds the 200 DMA and clears Tuesday high, room to run to recent highs. INTC Inside day, with 21.32 max risk. Today's high and R1 line up. JWN Inside day. Today's low max risk. Must clear R1.
Shorts:
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
CHRW 58.45 the point to break under with today's high a good tight risk
APA 77.41 good risk and needs to break 75.30 the 10 DMA
VMW Today's high max risk. Has to now break 77.55.
Category 6: White Cap-Having a 2-3 Day correction over the pivots. In a Negative Phase, Positive Pivots. Can sell an Opening Range High Failure if happens below R1 or previous day high whatever is higher and/or weakness if breaks S1 and prior day's lows
AVB Has to break S1. And not clear 128.50 and Tuesday's high, which lines up with the 50 DMA.
Bye for Now!
