After Thursday’s strange day, today was a great way to finish off the week. The Nasdaq (QQQ)gapped higher this morning and spent the day consolidating at higher levels. The S&P 500 (SPY)confirmed its bull phase. The Russell 2000 (IWM) looks poised to climb higher after holding the10 DMA and closing above the high from the day that it gapped down (8/15). The Dow Jones Industrial Average (DIA) broke out of its inside day and is beginning to climb back to support.
It is beginning to look like the market wants higher prices and this correction may be coming to an end. Although, it is worth noting that volume was not impressive in the indexes (except in DIA, which had an accumulation day). The next test for the indexes is if IWM and SPY can close the gap from 8/15. TBT dropped sharply today and closed beneath the 10 DMA.
S&P 500 (SPY) Confirmed the bullish phase and closed just under the 10 DMA but above the gap from 7/11. Subscribers: Pivots positive.
Russell 2000 (IWM) Closed above the 10 DMA. Watch for 103.33 to clear. Subscribers: Pivots positive.
Dow (DIA) Broke out of its inside day and climbing. Subscribers: Pivots positive.
Nasdaq (QQQ) Gapped up and consolidated. Watch for Friday’s low to hold. Subscribers: Pivots positive.
ETFs:
XLF (Financials) Pushing against the 50 DMA and looks poised to break it. Still in a warning phase.
SMH (Semiconductors) Sideways consolidating action. Doji day. The 10 DMA needs to clear.
XRT (Retail) Broke down from its inside day and closed on support.
IYT (Transportation) Confirmed the bull phase. Digesting the big move from Thursday.
IYR (Real Estate) Broke out of its inside day and closed above the 10 DMA.
XHB (Homebuilders) Closed under the 10 DMA but is holding the 200 DMA.
GLD Great move and had anaccumulation day in volume.
USO (US Oil Fund) Closed above the 10 DMA.
OIH (Oil Services) Confirmed the bull phase with an accumulation day. Watch for 45.50 to hold.
XLE (Energy) Closed above the 10 DMA and is now in an unconfirmed bullish phase.
XOP (Oil and Gas Exploration) Closed above the 10 DMA and confirmed the bullish phase.
TBT (Ultrashort Lehman 20+ Year Treasuries) Broke down out of its inside day and closed under the 10 DMA. Look to 79.00 as support.
EWG (Germany) Subscribers: Made new yearly highs today.
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 caneither 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)
CI Inside day. Watch for a breakout with good risk over Friday’s high. Today’s low must hold.
EMN Watch for a breakout or reversal against the 10 DMA.
WSM Compressed between the 10 and the 50 DMA. Watch for a breakout or reversal against the 10 DMA.
MDVN Watch for a breakout or reversal against the 10 DMA.
SLB Watch for Friday’s high to clear and Friday’s low to hold.
CLR Holding support on two moving averages. Watch for a breakout or reversal against the 10 DMA.
ESRX Inside day, holding the converging 10 and 50 DMAs. Confirmed the bull phase on Friday. Watch for a breakout over Friday’s high.
CHKP Watch for a breakout or reversal against the 10 DMA.
Category 4: (Rip Tide)N/A
Phase Change:
BA Inside day. Confirmed bull phase holding support on the 10 and 50 DMAs. Watch for Friday’s high to clear.
LF Inside day holding the 50 DMA. Moved into an unconfirmed bull phase on Friday. Watch for a breakout over today’s high.
NBL Moved into an unconfirmed bull phase on Friday. Watch for a breakout or reversal against the converging 10 and 50 DMAs.
Shorts:
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
USG Watch for a breakdown or OR high failure under 23.41.
LPX Watch for a breakdown or reversal under today’s close. 14.50 is support
AGN Watch for a breakdown or OR high failure under the converging 50 and 10 DMAs. Moved into an unconfirmed bear phase on Friday.
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
CAT Watch for a breakdown or OR high failure against the 50 DMA.
Best wishes for your trading,
Geoff & Matt
