Tonight’s evening watch was prepared by Geoff Bysshe.
As IWM stayed stuck under its 200 DMA, the QQQ, SPY and DIA all drifted higher in steady and uneventful trading.
The SPY closed right on its 50 DMA and at the same level of the high of the gap down day of 7/31.
This is a very important inflection point that will almost certainly be important in tomorrow trading.The key levels to watch for tomorrow are the today’s low in the SPY and the IWM since a reversal of today’s action to below those levels would have the bears feeling like the markets just rejected attempts to trade above their 50 and 200 DMA’s respectively.
The bulls seem to be in control but based on the extremely light volume there aren’t very many around. So I’ll follow their lead until key daily support is broken.
Subscribers: Positive Pivots in all 4 of the major indexes
S&P 500 (SPY) The key level is today’s low 195.76. Above that the momentum is intact, but there’s plenty of resistance above so I’d be careful about paying up. 196.16 fills an important gap.
Russell 2000 (IWM) Still stuck under its 200 DMA and if it breaks it by trading over today’s high the next big level to clear is 144.30. Watch for weakness if today’s low is broken in earnest.
Dow (DIA) Still got a little ways to go to get back to its 50 DMA which is now obviously sloped down.
Nasdaq (QQQ) Even with CSCO getting hammered today the QQQ led the market higher. 97.30-97.50 is the zone of resistance at the highs, and not very far away.
XLF (Financials) Kept up with the market today, but now its right at its 50 DMA or 22.71 and heavy resistance from prior price action.
KRE (Regional Banks) Notably weak today closing on its lows for the day and in a pattern that could be a bear flag. This could be a short in the making
SMH (Semiconductors) A confirmed phase change to bullish, but the real resistance comes in at 49.85-50.00.
IYT (Transportation) Nice big volume strong day and close over the 50 to put it back in an unconfirmed bull phase.
IBB (Biotechnology) Nice follow through to confirm its bull phase and breaking out of a significant daily range high level of 260.60.
XRT (Retail) Stuck between the 50 and 200 DMA but looks like it wants to break higher.
IYR (Real Estate) Matched its 2014 highs and closed with a doji.
ITB (US Home Construction) Very strong day with a pick up in volume, but still in a solid bear phase.
GLD Second inside day in a row bullish phase and sitting on its key long and very long term support levels.
Metals and Mining (XME) Inside day, compressing. Could be one to watch.
USO (US Oil Fund) Broke down hard. 35 could be support, but below that there is plenty of room to fall
XOP (Oil and Gas Exploration) Another weak day, watching to see how it reacts to its nearby 200 DMA.
FCG (First Trust ISE Reserve NatGas) Subscribers: Continues to slide further under the 200 DMA
TAN (Guggenheim Solar Energy) Subscribers: Nudged over the 50 DMA and back in an unconfirmed bullish phase
TBT (Ultrashort Lehman 20+ Year Treasuries) TLT-Closed on new highs after strong demand at the 30-yr bond auction today.
UUP (Dollar Bull) consolidating in a bullish way.
EEM (Emerging Markets) Inside day.IFN (India Fund Inc.) Subscribers: Moved to an unconfirmed bullish phase and testing a trendline from the 2014 highs. Keep an eye on it.
EWW (Mexico) Subscribers: Stalled after making new highs, but still looks good
FXI (China Large Cap Fund) Subscribers: Pulled back to support
CORN (Corn) Subscribers: Nice move out of an inside day. Has a nice bas with highs around 26.50
JO (Coffee) Subscribers: stuck under the 10 DMA and trying to bottom on top of support.
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:
CCI will look for ORR with risk under 77.70, but would not chase higher
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)
PEP Look for breakout close to 91.80 with risk under today’s low 91.46.
FB good for a breakout risk to S1
EL Good for a breakout over pivots risk to 75.70
DRI Good for a breakout over pivots risk to PDL
STT two inside days good over 70.29 risk to PDL
BHP Slightly negative pivots. Good over PDH with risk to 71
Category 4: (Rip Tide) N/A
Phase Change:
DAN If holds PDH good for a breakout risk to 23.30
COH If holds 35.70 good for an ORR against 36.09
Shorts:
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
COG bearish phase good for an OR high failure or breakdown under today’s low
APC look for short under FTP if can use FTP (106.03) is over HOD
FTI Look for short with risk over 60
HES- Good for an opening range high failure, risk over FTP
Category 6: White Cap-N/A
