In New Mexico, if you tell the waiter you would like Christmas with your breakfast burrito, it means you want both red and green chile. If today didn’t wreak so much havoc, with the red and green radar screen we are showing, I would say it’s beginning to look a lot like Christmas, only that would be associated with a joyous time. Today was far from joyous. The Fed announced they would keep quantitative easing in place; hence,rates and the US dollar dropped cooperatively. But, the S&P 500 and the Russell 2000s failed to cross recent highs and although closed unchanged to slightly green, dropped to the intraday lows. The Dow made a new high and closed on the intraday lows in the red. NASDAQ made a new high and closed very close to its intraday lows. This is the 3rd time since May 22nd, news highs are met with major selling. May be a sign of topping action, may be a sign that rallies are nothing more than bears running for cover every time the market does run, may be a sign we are in for a month or so of an aggravating trading range and that’s all. I’m no perma bear. However, today I found myself bailing out of many longs in our portfolio leaving us mainly in cash. Let’s just say shaken, not stirred!
S&P 500 (SPY) 169.83, 169.86, 169.85-the last 3 highs including today’s. Triple tops perhaps. But, now, unless those number substantially clear, staying clear of too many long positions. Maybe this is just the top of the trading range and not much more. Time will tell. Subscribers: pivots positive in all indexes. If breaks watch SDS the ultrashort
Russell 2000 (IWM) 104.98 the number here to clear for this to bring back confidence
Dow (DIA)This cleared 155.74 to make new highs only to close below it. Could mean reversal, could mean digestion. Interesting is the low RSI in this index so close to all-time highs
NASDAQ 100 (QQQ) DOJI (when the opening and closing price of the day are basically the same) right above the old 2013 highs. Been a leader lately, watch this carefully
ETFs:
XLF (Financials)This at least has to clear 20.67 to look ok, then recent highs to look even better and of course, hold 20.35
SMH (Semiconductors) Confirmed bullish phase but has a lot of overhead resistance. The 50 DMA is key
XRT (Retail) The good news-broke above the channel. The bad news: Could be yet another reversal candle from new highs
IYT (Transportation) Like to see this clear 116 now and hold the declining 50 DMA below
IBB (Biotechnology) When I want to feel good about the market, I look here
IYR (Real Estate)Why if the rates are going to fall, does this look so awful? Why, if the economy is improving moderately does this look so awful?
XHB (Homebuilders) Cleared 30.00 but not the 50 DMA so no improvement in phase to report
GLDConfirmed bear phase but a really interesting range expansion around the moving averages.Subscribers: Might like this tomorrow-depends on the 50 DMA
USO (US Oil Fund)Could be short covering-certainly a nice pop after a 8 day correction
OIH (Oil Services) Subscribers: Closed over the 80 monthly moving average but the daily is not enticing here
XLE (Energy) 84.00 is key
XOP (Oil and Gas Exploration) Subscribers: I like the monthly close but have to see recent clears now
TBT (Ultrashort Lehman 20+ Year Treasuries) Nasty looking reversal candle if confirms.
EWW (Mexico) Subscribers: On radar now that it is in a recovery phase to see if it can confirm.
SGG (Sugar) Subscribers: Long on the dip to 58.35 for a swing
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
NOTE: I liquidated a lot of the weaker long positions today.
Post Earnings: PXD An open above 158 will support a breakaway gap
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:
CLH Reports August 7th. Still looks good if can hold around 56.40 and clear and close above 57.00
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)
TDC Reports before the open. If opens over the 200 DMA and 60, could see good move higher with risk the 200 DMA
TXN New monthly close that goes back 13 years. If holds today’s lows, can see over 39.77 a move to 50.00 or higher longer term
SWK New highs Has to hold today’s lows and hten could see around 90.00
GCI Although this had a decent opening range reversal, it now has to clear 26.35 to look a lot better. Plus, hold 25.50 most conservatively
DOW I exited for the portfolio, but it still looks good as long as it holds the 10 DMA 34.76
BBY It was a great trade on the wrong day. Now, would like an opening range reversal to control risk to the 10 DMA.
OI Cleared the 80 monthly today. Over 30.00 this should continue.
COF If holds today’s low, can look at an entry on a reversal or move over today’s highs
Category 4: (Rip Tide) N/A
Phase Change and/or Slingshot Lows:
BEAM Unconfirmed bullish phase and has to clear 66 hold today’s lows
TDC Wedged between the 10 and 200 DMA for a possible phase change. Has to clear today’s highs and hold today’s lows
MAS A bit thin and wild, but holding the moving averages provided it holds around 20.50. And if clears, could see 21.50 then higher
Shorts:
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
CAT 84.00 max risk and has to break S1
STX Inside day and cannot clear today’s high. Plus, must break S1 to see move to 200 DMA
MCD Risk 98.54 and support down at the 200 DMA 95.26 as first target
DIS would only try again under today’s lows
GOOG Unconfirmed warning phase and needs to break S1 and not cross the FTPs at 891.00
Category 6:N/A
Bye for Now!
