A Floatie Is A Floatie
No matter where it comes from
I ended Monday’s night’s commentary wondering if the Federal Reserve would be the Baby Ruth Bar thrown into the pool or “the turd to end the rally.”
Instead, the turd was “Made in China.” A Baby Ruth bar is an innocuous threat since it’s really made of chocolate. China devaluating their currency on the other hand-well, if it looks like, smells like, and tastes like, then it is a...
Recently, we examined the 3 layers to watch concerning the market direction. The 2015 trading range, the July 6-month calendar range and the Phases.
Phases, especially given the cycle of nature, are most intriguing as we have seen a perfect deterioration of them by watching the Dow (DIA). In 2015, it has changed phases 17 times!! The Death Cross or Bearish Phase it entered as of Tuesday, completes half of the 6 phase’s cycle.
When Phases change that often, the interpretation that instability is around the corner makes sense. It translates to nervous longs and shorts with an overall lack of commitment by either. Now that DIA is in a Bearish Phase, we assume to be a seller of rallies since we have no way of determining the amount of time it will sit in this Phase nor how much lower the price can trade from here.
Concerning the other 2 layers, the July 6-month Calendar Range low 174.44 broke down. The 2015 Trading Range low 170.10 is a major support level.
We are still in this humongous 2015 trading range in all of the indices. What is best about Bearish Phases, is that hope springs eternal. At some point, all instruments improve back to a Recovery Phase. Helpful to technical traders is knowing how to detect bottoming action, discern risk and ascertain confirmation.
With our Economic Modern Family (IWM, XRT, IBB, SMH, IYT, KRE) we span the phases from Warning to Bearish. Please click on “Economic Modern Family” to learn more about how it works.
Our weakest sector, Semiconductors, was first in the pool on Monday and subsequently, first one to nearly drown on Tuesday. Our strongest sector, Regional Banks, entered an unconfirmed warning phase. That has only changed phases 3 times this year.
Using similar logic as with the DIA, KRE is above the 2015 and July 6-month Calendar Range lows with a direction not nearly as uncertain.
Currently, the Bulls are defending our Prodigal Son, keeping him away from floaties and instead, keeping him afloat on a raft.
S&P 500 (SPY) Here’s another one following the multiple personalities guide to phase changing. Back in an unconfirmed warning phase, the 200 DMA 207.53 is next and over 210 a huge surprise. Subscribers: Negative Pivots in all
Russell 2000 (IWM) Granddad makes me uneasy unless it can clear back over 121.50.
Nasdaq (QQQ) Seriously, this is defending the 50 DMA like an Olympian swimmer.
XLF (Financials) Only 11 phase changes thus far this year. In a bullish phase currently.
KRE (Regional Banks) 42.74 is the July 6-month Calendar Range low with 44.16 the 50 DMA
SMH (Semiconductors) Held 51 so that’s something.
IYT (Transportation) 2 inside days which means a really good one to follow the way the range breaks keeping in mind the strong bottoming formation.
IBB (Biotechnology) If fails 361.89 fails the July low. Otherwise, has to hold 364.50 or looks like July low will turn into a watch for the 200 DMA well below
XRT (Retail) Granny giving us drama, breaking but then closing on the 200 DMA
IYR (Real Estate) Closed over 75.20 which means could be the sector to save the day!
XHB (US HomeBuilders) Inside day. Near 2015 highs which looks inevitable to clear with a 7 month consolidation
GLD (Gold Trust) Closed over 106, but I’m still not that impressed
SLV (Silver) Inside day under the 50 DMA making this more worthwhile to watch
GDX (Gold Miners) Big volume-so there is buying
USO (US Oil Fund) Not done yet but that won’t last forever
OIH (Oil Services) Bottomed last week and had an inside day
XLE (Energy) Like this one a lot with good volume coming in
XOP (Oil and Gas Exploration) Inside day.
UNG (US NatGas Fund) Like this a lot too especially over 13.75
TAN (Guggenheim Solar Energy) Another new low since January’s low of 31.77. I continue to stand aside but watch for a valid reversal signal.
TLT (iShares 20+ Year Treasuries) Unconfirmed accumulation phase.
UUP (Dollar Bull) Closed unchanged and holding support
EWI (Italy) Inside day and looking better than most
FXI (China Large Cap Fund) 40.00 pivotal
CORN (Corn) After holding 23.00 it took off to the 50 DMA resistance and then retreated
JO (Coffee) Huge move last 2 days-will most likely digest some now
***Market Tone: Short-term Positive 0, Intermediate-Term Negative 1, and Long-Term Positive 3.
NOTE: *All starred picks are from the automated list of picks (which now includes short picks!) denote that it has one or more of the 18 chart patterns we have used on the radar screen. For example, inside day, 2 days under floor trader pivots, phase change, brick wall or return to the 10 DMA, etc.
Longs:
ACN
ADBE
AET**
AFL
AIV**
ALK
AMGN
AMZN
BA
BC
CB
CME
CTXS
CUBE**
CVRR
DB
EL**
EQIX
EWI**
EXPE**
FFIV
FITB
GOOG**
IGT**
JAH
JNPR
LEN**
LGF
MPC**
NFLX**
PBF**
PRU
PSX
REGN
STLD**
STZ**
SVXY
TER
TIF
TLT**
TOL
UA**
VRTX
Shorts:
AAPL
ALL
BIDU
BIIB
BMY
CLDX
COF
CSC
DIA
DISH
FOX
FOXA
HST
IR
LNKD
MWV
MYGN
PG
SCTY
TRMB
TROW
WFM
WYN
Best Best wishes for your trading,
Michele Schneider
