Rather than following the recent pattern of testing support in the morning and then grinding higher, the four major indexes found support in the morning and then spent the day chopping sideways. There are inside days in Nasdaq (QQQ), the Russell 2000 (IWM) and the S&P 500 (SPY). The Dow Jones Industrial Average (DIA) is the only index without an inside day, as it broke recent lows but closed above the gap from 7/10. It is very important to watch how the inside day ranges break in the three indexes that have them. Overall, the market is very mixed, compressed and ripe for a breakout. The choppiness we are experiencing requires you pick your positions carefully, go where the volume is and be precise with your entries.
S&P 500 (SPY) Inside day. Watch how the range breaks. Under the 10 DMA. Subscribers: Pivots negative.
Russell 2000 (IWM) Inside day. Watch how the range breaks. Under the 10 DMA. Subscribers: Pivots negative
Dow (DIA) Broke recent lows and closed above the gap from 7/10. May test the 50 DMA Subscribers: Pivots negative.
Nasdaq (QQQ) Inside day and holding the 10 DMA. Watch the range break. Subscribers: Pivots positive.
ETFs:
XLF (Financials) Holding support and under the 10 DMA. Recently over the 80 monthly.
SMH (Semiconductors) Inside day with a close over the 50 DMA. Now in a confirmed bull phase.
XRT (Retail) Doji candle with a close over the channel. Back under the 10 DMA.
IYT (Transportation) Testing the 50 DMA.
IBB (Biotechnology) Watch for 194.54 to hold.
IYR (Real Estate) Watch for 64.00 to hold. If that breaks, this could test the June lows.
XHB (Homebuilders) Holding support and under resistance. Testing the 200 DMA.
GLD Good climb this morning and consolidated for the remainder of the day.
USO (US Oil Fund) Grinding higher. 38.12 is the next hurdle.
OIH (Oil Services) Closed under the 10 DMA, holding the 80 monthly.
XLE (Energy) Inside day. Sideways and choppy under the 10 DMA.
XOP (Oil and Gas Exploration) Inside day.
TBT (Ultrashort Lehman 20+ Year Treasuries) Holding yesterday’s gap and chopping sideways.
FXI (China) Subscribers: Inside day
SGG (Sugar) Subscribers: Sweeter and sweeter. Held the top of the channel.
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:
WDAY Corrected to and holding the 10 DMA. Watch for a breakout or reversal against the 10 DMA.
Category 2: (Pipeline) N/A
Category 3: (Double Up) Positive Phase, Condition 1 through 4, Positive Pivots which means can eitherbuy 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)
OI Recently over the 80 monthly. Inside day. Watch for the high to clear and the low to hold.
FLS Inside day over the 10 DMA. Watch for a breakout over today’s high and today’s low must hold.
SLB Watch for an opening range reversal or breakout against the 10 DMA. 81.85 is max risk.
AON Holding the upward sloping 10 DMA. Look for a breakout or reversal against the 10 DMA. Today’s low is max risk.
Category 4: (Rip Tide) N/A
Phase Change:
NOW Unconfirmed Bullish phase. Watch for a reversal or breakout against the 10 DMA.
CBI Unconfirmed bullish phase. Watch for a breakout or reversal against the 50 DMA.
Other:
ETN Holding support on the 10 and 50 DMAs. Inside day. Look for a breakout over today’s high and today’s low needs to hold.
NBR Inside day over 3 converging moving averages. Watch for today’s high to clear and today’s low to hold.
NYT Recently over the 80 monthly. Inside day. Watch for today’s high to clear and the low to hold.
RTN Inside day holding the 10 DMA. Today’s low must hold and the high must clear.
AET Inside day holding the 50 DMA. Watch for a breakout over today’s high. Today’s low must hold.
Shorts:
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
KMP Watch for a breakdown or OR high failure under 81.31.
HD Unconfirmed warning phase. Watch for a breakdown or OR high failure under today’s low.
TRMB Watch for a breakdown or OR high failure under today’s low.
Category 6: N/A
Best wishes for your trading,
Geoff & Matt
