The market opened this morning with nearly all of us watching the indexes. I was asking myself, “Can SPYand IWM clear the 50 DMA? Or will they fail, leaving only Nasdaq in a bullish phase?” It seemed like an important test. The Russell 2000 and the S&P 500 cleared the 50 Day Moving Average, and spent most of the day trading above it. However we are not out of the woods yet, as SPY was unable to close above the50 DMA (confirming its warning phase). The S&P 500 and Nasdaq closed with inside days. Watch how the inside day ranges break in SPY and QQQ as an indicator of the next short term move. As I have been during the correction that we’ve seen the past few days, I will be focusing on stocks with good volume and are holding key levels of support. The FED minutes are released tomorrow. Don’t expect any big news regarding policy changes but, this can mean volatility.
S&P 500 (SPY) Inside day. Confirmed the warning phase. Subscribers: Pivots positive.
Russell 2000 (IWM) Back into an unconfirmed warning phase. Subscribers: Pivots positive.
Dow (DIA) Closed on moderate support. 149.20 is the gap low from 5/3. Watch for that level to hold. Subscribers: Pivots negative.
Nasdaq (QQQ) Inside day.This is the best performing index. Watch how the range breaks. Subscribers: Pivots positive.
ETFs:
XLF (Financials) Closed above the gap from 7/5. Holding the 80 monthly moving average.
SMH (Semiconductors) Inside day.
XRT (Retail) Closed above the 50 DMA. Now in an unconfirmed Bullish Phase.
IYT (Transportation) Closed over the 50 DMA. Now in an unconfirmed bullish phase.
IBB (Biotechnology) Holding the upward sloping 50 DMA and the gap from 7/11.
XHB (Homebuilders) Cleared the 200 DMA and is now in an unconfirmed warning phase.
GLD Digesting the higher levels from the move up on 8/15.
USO (US Oil Fund) Broke down out of the range from the inside day. Closed under the 10 DMA.
OIH (Oil Services) Holding the 50 DMA.
XLE (Energy) Confirmed the warning phase.
XOP (Oil and Gas Exploration) Closed above the 50 DMA, bringing this into an unconfirmed bullish phase.
TBT (Ultrashort Lehman 20+ Year Treasuries) Corrected slightly and is holding Friday’s closing price.
UUP (Dollar Bull) Tested and held the June lows.
EWW (Mexico) Subscribers: Now in an unconfirmed Recovery Phase.
SGG (Sugar) Subscribers: Inside day and confirmed the Bear phase.
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 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)
IACI Holding the 50 DMA and is very compressed. Watch for a breakout or reversal against the 10 DMA.
BA Inside day. Confirmed the Bullish Phase. Watch for a breakout over today’s high and the 10 DMA.
FDX Compressed and holding the 10 DMA. Watch for a breakout or reversal against the 10 DMA.
FB Over the 10 DMA on impressive volume. Watch for a breakout or reversal against the 10 DMA.
KKD Watch for a breakout or reversal against the 10 DMA.
CI I prefer an OR reversal to control risk. A breakout is an option if risk is in line.
YELP 2 inside days. Watch for a breakout over the 10 DMA and today’s high. Today’s low must hold.
WYNN Inside day, holding the 10 DMA. Watch for today’s high to clear and today’s low to hold.
IGT Watch for a breakout or reversal against the 10 DMA.
ROST Climbed over the 10 and 50 DMAs today, bring this into an unconfirmed bull phase. Watch for a breakout or ORR against the 50 DMA.
Category 4: (Rip Tide) N/A
Phase Change:
NBR Cleared 3 converging moving averages. Watch for a breakout or reversal against support.
Other:
STLD Corrected and is holding support. Look for a breakout or reversal against the 10 DMA.
ILMN Holding the upward sloping 50 DMA and closed above the 10 DMA. Watch for a breakout or reversal against the 10 DMA.
WDAY Compressed and holding the 10 DMA. Watch for a breakout or reversal.
Shorts:
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
NFX Under 3 converging, downward sloping moving averages. Watch for a breakdown or reversal.
PBR Watch for a breakdown or OR high failure against the converging 50 and 10 DMAs.
Category 6: White Cap-Having a 2-3 Day correction over the pivots. In a Negative Phase, Positive Pivots. Can sell an Opening Range High Failure if happens below R1 or previous day high whatever is higher and/or weakness if breaks S1 and prior day’s lows
FCS Thus far, unable to clear the 10 DMA. Watch for a breakdown or reversal against the 10 DMA.
Best wishes for your trading,
Geoff & Matt
