If the markets are in a melt up phase then one day of rest is all they need to move higher. The SPY got it's rest day on Friday. The QQQ refused to close lower, but it too spent the day consolidating.
As I look forward to the what is typically one of the lowest volume weeks of the year I expect the same three themes from last week to hold true.
Because of the consolidation in the IWM, the markets may be able to move higher. If this happens I’ll be inclined to follow it and may even establish a position in the IWM, but I won’t try to predict it a day in advance.
With such light volumes I may focus on getting positioned in some ETF's this week to try to get in before Wall St. comes back to work in Sept. Some of the ones I've got my eye on are IBB, IYR, ITB, GLD, USO, XME, FCG, IFN, EWW
S&P 500 (SPY) - A day of rest and pretty tight consolidation may be all it needs for another move higher, but I'd be more inclined to buy individual stocks than this index until it consolidates or tests the 198.00-198.50 area.
Russell 2000 (IWM) - Just noise until it breaks 113.50 or 115.80, but those levels are big.
Dow (DIA) - Nothing noteworthy here.
Nasdaq (QQQ) - Has not broken its prior day low in 8 sessions. That's the only level I care about tomorrow.
XLF (Financials) - Should hold the 23 level if it retraces.
KRE (Regional Banks) Closing in on the 200 DMA at 39.40 with other key resistance at 39.30.
SMH (Semiconductors) - Doji after breaking the 2014 highs. Key level to hold is 50.80.
IYT (Transportation) - Has 4 days of consolidation. 152.40 is the number it needs to breakout of on the upside. If it slides under yesterday's low, look for major support at 149
IBB (Biotechnology) - Nice 2 day pull back to look for a move higher from. If it continues to slide 261.70, 260.60 and 260 are all key levels to look for support.
XRT (Retail) - Moved higher like a leader. Keep an eye on it. Pull back intra-day to 87.80 could be good reversal trade.
IYR (Real Estate) - Hit hard, but now sitting on a good support from 73.50 - .30.
ITB (US Home Construction) - Inside day and a nice 3 day consolidation on the 200 DMA. Key level to breakout is 24.40 and to hold is 23.75
GLD (Gold) - Held up after the big move down the prior day. I've had my eye on the 123-122 level for weeks. Subs may see me buy some this week.
XME (Metals and Mining) - Faked out the breakout trader (me included last week, but may we time to buy the failed failure. I'm watching this closely. The weekly picture is still explosive.
USO (US Oil Fund) - Look at a weekly chart of closes and you'll see it sits on a trend line that goes back to April 2013. If you look at weekly lows there is another trend line from the 2012 lows that comes in at 34. Based on last week's daily action it time to start looking at last week's 34.50 area as potentially a low risk trade to pick a major low.
XOP (Oil and Gas Exploration) - Subscribers should know we're in this and given today's comments on USO I like it even more. Were not risking to the low of the move here, but hopefully Friday's inside day will be the consolidation it needs to breakout over 77 to get to 78. Until then 75 should hold.
FCG (First Trust ISE Reserve NatGas) - Premium subs should know I've started to nibble on this one. Inside day sitting on the 10 DMA. Could break either way, I'll likely add if it breaks up. Key levels are 20 and 20.55
TAN (Guggenheim Solar Energy) - More consolidation today, which is good. I like to find the big number to focus on in any market. Here it's 43.
TBT (Ultrashort Lehman 20+ Year Treasuries) - TLT - should hold 116.80. I would not pay up for this but I think this will continue to surprise the bears with its strength. Friday's highs, 117.43, and 117.90 are significant resistance for now.
UUP (Dollar Bull) - Another nice up day but 22 is probably going to be hard to break. I'll be interested when it pulls back to 21.80. The weekly base is very impressive.
EEM (Emerging Markets) -Friday felt like the day when the breakout traders bailed out. Let's see if it can stabilize.
IFN (India Fund Inc.) - Just as I said about FIX a couple days ago. It's consolidation is getting old. It needs to break 26 soon or lookout below. Keep an eye on it.
EWW (Mexico) - Thought it would run after Thursday's breakout, but reversed and closed weak. The good news is it bounced off 71 whis is the line in the sand for the bulls. Must hold 71.
FXI (China Large Cap Fund) - Looking at 40.35 as support and 41.15 to be the sign that the bulls are back. Between these levels is just noise.
CORN (Corn) - More consolidation.
JO (Coffee) Stuck in the middle of the range is 34.46 to 36.80.
* * * * * Picks * * * * *
NOTE FOR MONDAY:
As I stated abouve there are quite a few ETF's at very interesting long term levels. Imay start putting on "position swing" trades in some of these names. I'll use the term "position swing" to mean that I am using stops that could be well over 1 ATR and may scale in. I'll describe my plan as I act in detail in skype but text messages will not be as detailed.
- Geoff
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:
KMX – I've been looking for a breakout but its been channeling higher, so I'm more inclined now to buy an ORR where I can risk to under 50.50.
IFN - Five days of consolidation at a key level of 26. Looking for a break of 26 and a stop under 25.80 or 25.65 for a swing trade.
AMGN - A high tight flag, this is a day trade set up that could run and be worth holding as a mini-swing. Max risk 132.30.
CTXS - 70.25 was a big breakout friday but it fell back, will look for trade with Friday low in the stop.
TWTR - Big day Friday. could be a good 5 min breakout or an ORR against 45.50.
CYH - Looking for ORR against 51.80.
IBB - Looking for trade with risk under 263, but breakout over 267 might be worth a low risk try.
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 below 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)
ITB- Looking for a breakout of daily consolidation. Prefer breakout over 24.20 with risk under 23.75. But ORR with risk under 23.75, may be worth a shot.
SODA - Looking for breakout over 34 with a stop under 33.30.
Category 4: (Rip Tide)
FCG - If inside day breaks up, then I'm anticipating low of the move is now 19.77. My risk level is under 20.
Phase Change:
N/A
Shorts:
Category 5: (Titanic) Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
LVS - Max risk 69.70.
TROW - Must be below 79.90, max risk 80.20
CB - Max risk 91.20
PM - Max risk 85.25
FLR - Inside day. Max risk 74.60
Category 6: (White Cap)
N/A
Best Best wishes for your trading,
Geoff Bysshe
President
MarketGauge
Filling in for...
Michele Schneider
