I do see the possibility that the rates have bottomed. Maybe this isn’t the exact tick of the bottom, but the breadth or strength of the move in TLTs is waning.
Therefore, one has to keep thoughts on the fallout and the pearls if rates firm from here. The market is expecting that to happen and lately, firmer rates act as a boost of confidence to the overall market. Yet, that doesn’t mean we won’t see lower prices. The cycle of phases indicates more deterioration likely, but let the market tell you when. More plausible right now is a range bound market, at least for the rest of this month.
We also know similar to the cycle of phases, sectors go through a rotation as well. I have written before about where I keep my eyes when I see the prospect of firmer rates-Financials, Regional Banks,certain Retail chains that benefit from stronger dollar and rates such as Wal-Mart, and countries such as China and Mexico.
As I am heading out on vacation for the rest of the month, returning September 2nd, I pass the baton to Geoff Bysshe, President of Marketgauge.
I wish you all a wonderful and profitable rest of the summer. See you September 2nd!
S&P 500 (SPY) Sitting on the 10 DMA in a warning phase which could accelerate if the market continues to drag. Over Tuesday’s highs would be a decent rescue Subscribers: Negative Pivots in all
Russell 2000 (IWM) Under the 200 DMA but not out of the woods. If it can clear 113.75 so much better
Dow (DIA) Over 165.85 better but under 165 see the 200 DMA again
Nasdaq (QQQ) Doji day and remains in the bullish phase making a lot of the other indices looking more like noise.
XLF (Financials) Good place to look if holds today’s lows
KRE (Regional Banks) Look here and you wonder where the bulls are?
SMH (Semiconductors) This really has to take some leadership and clear the 50 DMA
IYT (Transportation) Similar to SMH
IBB (Biotechnology) Back to unconfirmed warning phase
XRT (Retail) Back below the 50 DMA but on the 200 DMA
IYR (Real Estate) Inside day
GLD I still see this as a negative in the intermediate term, especially given the rate commentary
Metals and Mining (XME) Digestion day
USO (US Oil Fund) Unconfirmed Distribution phase-dancing on the 200 DMA-keep watching
TAN (Guggenheim Solar Energy) Subscribers: Why we waited to get long
TBT (Ultrashort Lehman 20+ Year Treasuries) I like the TBTs here especially if hold today’s low and clear 58.50
EWW (Mexico) Subscribers: Big move
FXI (China Large Cap Fund) Subscribers: Back on track for new highs and around 43 target
CORN (Corn) Subscribers: Possible reversal candle today and time for another long probe if holds around 25.75
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) N/A
Category 2: (Pipeline) N/A
Category 3: (Double Up) Positive Phase, Condition 1 through 4, Positive Pivots which means caneither 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)
CTB Inside day and still poised especially for a day to miniswing if holds 30.15
EL Reports August 15th before open Cleared the 50 DMA and confirmed bullish phase with an inside day. If holds today’s low and clears 75.40 area good start
SCCO 31.35 is the 50 DMA and risk. Has to clear today’s highs now
HPQ Negative pivots but like this overall chart a lot over 35.35 with risk to the 50 DMA 34.45
RHT Inside day near the highs-great setup for a day to mini with risk under 58.85
INTC Slightly negative pivots but really like the close and a move over 33.40 looks good with risk to under 32.39
CYH Slightly negative pivots and an inside day. On the 10 DMA so like risk to today’s lows and a move over 48.85 good
Category 4: (Rip Tide)N/A
Phase Change:
HUN Slingshot confirmed. 26.70 good risk point with 27.16 R1 and 27.46 the 50 DMA overhead to clear
ONVO 8.40 is the 200 DMA but now, like a lot of holds this 7.70 level
PRU 86.90 max risk with a move over 87.92 good for a swing
FWLT Inside day after slingshot low which means if holds 31.87 area and clears 32.53 still good
DDD Might be bottoming if holds 47.90 and can clear 50.00
Shorts:
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
APC Back under the 50 DMA which now resistance. Like on an opening range high failure or breakdown
FTI Under the 50 DMA for unconfirmed warning phase. Under 59.56 could see another 3.00 lower
TRN Back on the list. Like on an opening range high failure but wouldn’t rule out selling weakness under 42.50
ALGN 54.46-54.51 is the 50 DMA resistance. Weakened today so look for follow through
DISH 63.30 god resistance with unconfirmed warning phase. Looking for confirmation under 62.49
Category 6: White Cap-N/A
