Ha! When I read back what I wrote last night about John Q. Public, then look at today's action, I realize why the public tends to lose-they get in too late and out too early! But really, the market hates uncertainty and with headlines all day from North Korea, it seems an already jittery market due to weakness in sectors which have been featured for last 2 weeks-Financials, Retail, Homebuilders, Transportation and Short Bonds, once you add talk of war, the possible key reversal occurs. Let's not forget the small caps. I was ready to divorce myself from the usual analysis on Russell 2000 weakness, yet another negative in a sea of negatives, because of the strong flock to industrial companies. I guess we can say never mind. However, the Dow held the support level. Unless it confirms with more downside tomorrow, this could have been business as usual, volatility with a 100 point move in either direction par for the course. Then, there's the distribution day in volume in the S&P 500. We are mainly cash after enjoying some big swing profits and a few shorts to offset. Uncertainty is not the best environment for swing traders like me as well!
S&P 500 (SPY) Distribution day in volume. Broke the fast moving average but still in a strong bull phase and held the channel top from the point of breakout on March 5th Subs: Most likely a good time to see how today's move digests from the sidelines
Russell 2000 (IWM) Broke the 50 DMA and now in an unconfirmed warning phase. Sometimes, when instruments get a return move through the 50 DMA, it offers a good low risk long entry. Oversold so watching for that.
Dow (DIA) Held the fast moving average but with a possible brick wall high. Tomorrow will be more telling
NASDAQ 100 (QQQ) 67.85 is the fast moving average below. Since this never got close to 2012 highs, not totally convinced this is over and done for.
ETFs:
GLD 150 today. Been negative here all year-now, 150 is a support level that could give this a bounce Subs: SLW had big volume and dropped to the 200 weekly and oversold. See more daytrade maybe miniswing
XLF (Financials) After an inside day, never a good sign when the lows break. Especially, when this was already one of the vulnerable ones we were concerned about. Now on the 50 DMA. Subs: Double the average volume today. Sometimes a sign of a blow off.
IBB (Biotechnology) Possible brick wall high if confirms
SMH (Semiconductors) Another dollar lower and I will be back into this long. Subs: And with triple the average volume today, a real head's up as a possible blow off.
XRT (Retail) Again, after an inside day and the double tops, hindsight is for more aggressive shorts. Now, the 50 DMA is close by
IYT (Transportation) Unconfirmed warning phase. See my comments on IWM for return moves Subs: At 105, will be very tempting to start a new long
IYR (Real Estate) Brick wall possible but also held the fast moving average. Probably the first place to look if the sharks swim away
USO (US Oil Fund) Unconfirmed warning phase. The 200 DMA is now at hand
OIH (Oil Services) Ugly but approaching support around 40.50 Subs: Now you know why I like to watch the 80 monthly moving averages. Kept us away
XLE (Energy) Broke the 50 DMA substantially so needs some work now before a new direction up or down Subs: Double the average volume today. Sometimes a sign of a blow off.
TBT (Ultrashort Lehman 20+ Year Treasuries) The best warning sign all along. When the market made new highs, this has stayed in a warning phase. Subs: 64.25 pivotal and the 200 DMA not too far away
XOP (Oil and Gas Exploration) Confirmed weak warning phase and now oversold. We are still above where 2013 began. That means, will begin to look for signs to reenter Subs: Had double the average volume which could mean a blow off today. Might look at a buy over 58.00
XHB (Homebuilders) Subs: Another one that had double the average volume with the 50 DMA not that far away
Subs: Typically blow off moves on high volume happen at new highs or lows. And they also have some digestion the next day until the setup of a corresponding move over previous day highs, R1 with a good risk. Although today was not new lows by any means, we will be watching and tweeting about this more.
UUP (Dollar Bull) Golden Cross forming. Needs to get through 200 weekly MA.
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:
MUR Like this if holds today's lows. Plus with negative pivots, see an entry over 63.05 area and an add if clears today's high
AOL Doji day and holding the 10 DMA at 37.09 max risk. The recent high is 39.62 and pretty close should this open well tomorrow
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)
M Kind of amazing action here. Now, rather buy weakness on a reversal against the 10 DMA unless the highs clear form 42.89
DIS At this point, have to buy new highs or wait to see if can hold 56.75 the 10 DMA on a reversal
UTX Improved in condition. Has to clear the recent highs 94.00, then hold 93.25 area
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:
YELP Tweeted about the reversal and now closed holding the 50 DMA with a doji. If holds today's low, watch for a move over 23.00 although it also will need to clear R1 and the 10 DMA for a new swing
CREE 47.78 is the 50 DMA and the gap low March 5th. Max risk now. 1st thing this has to do is clear the pivots. Then R1-so saying more day to miniswing for now
Phase Change: MBI I had to exit today but it had an inside day. If holds today's low, neutral pivots, might be looking for another entry. However, been volatile so perhaps it's a good time to let this calm down. COH Needs to clear 51.00 to get going FB Like on a reversal at this point if holds today's low FSLR 25.80 is the point to hold. Like over 26.30 and then has to clear today's high and the 10 DMA KSS Reversal only against the 46.30 level LMT Now has to clear 96.52 recent highs
Shorts: We have made a lot of money on the short picks this year. Therefore, no surprise that now that the market is tired, the short picks are slim pickings. They either are way oversold, or we already got the best of them.
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
AVB Has to break S1. And not clear 128.50.
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
EW Classic if breaks today's low and S1 and does not clear today's high
Bye for Now!
