Today seemed unremarkable, but was actually a rather healthy and necessary digestion day in the major indexes. Nasdaq (QQQ) actually made a multi-year high today, but closed near the opening price. The most volatile moment came shortly after US Secretary of State John Kerry’s statements on the conflict in Syria, when all four major indexes suddenly began to slide. I don’t think this is cause for too much alarm, as all indexes managed to hold support and closed relatively well. All indexes are on key support levels, however resistance is also overhead. Biotech (IBB) had an impressive day today. It is the last week ofAugust, and volume will likely remain low. Look for stocks with good volume and good support.
S&P 500 (SPY) Now in an unconfirmed warning phase. Watch for 163.64 to hold and the 50 DMA to clear Subscribers: Pivots slightly negative
Russell 2000 (IWM) Watch for 103.00 to hold. Subscribers: Pivots positive.
Dow (DIA) Approaching the negatively sloping 10 DMA. Subscribers: Pivots negative
Nasdaq (QQQ) Made multi year highs today but closed below with a doji day. Subscribers: Pivots positive.
ETFs:
XLF (Financials) Unable to break the 50 DMA. Watch for 19.90 to hold.
SMH (Semiconductors) Sideways consolidating action. The 10 DMA needs to clear.
XRT (Retail) Warning Phase and unable to break the 50 DMA.
IYT (Transportation) Confirmed the bull phase. Digesting the big move from last Thursday. Two doji days in a row.
IBB (Biotechnology) Impressive move today.
IYR (Real Estate) Holding the 10 DMA.
XHB (Homebuilders) Consolidating over the 200 DMA.
GLDStrong close today.
USO (US Oil Fund)Inside day and closed with a doji candle. Strong close.
OIH (Oil Services)Digesting the nice move up from Friday.
XLE (Energy) Confirmed the bullish phase and is consolidating over the 50 DMA.
TBT (Ultrashort Lehman 20+ Year Treasuries) Closed on support. If today’s low breaks, look to 77.89 to hold.
UUP (Dollar Bull) Inside day with a doji candle.
EWG (Germany) Subscribers: Inside day after making new yearly highs on Friday.
FXI (China) Subscribers: Inside day.
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:
LNC 2 inside days. Watch for today’s high to clear and today’s low to hold. Relatively far from moving average support, so risk must be in line.
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)
CI I prefer an Opening range reversal to control the risk.
OI Watch for a breakout or reversal against the 10 DMA.
SLB Watch for a breakout or opening range reversal against the 10 DMA.
PHH Holding 3 converging moving averages. Watch for a breakout or reversal.
IP Watch for a breakout or reversal against the 10 DMA.
CMC Watch for the ten DMA to hold and watch for a breakout or reversal. Forming a golden cross.
HLF watch for a reversal or breakout against the 10 DMA. 66.36 can be resistance.
Category 4: (Rip Tide) N/A
Phase Change:
UPS Confirmed a bull phase today and holding the positively sloping 50 DMA. Watch for a breakout or reversal against the 50 DMA.
Other:
ALXN Holding the converging 10 and 50 DMAs. Watch for a breakout or reversal against the 10 DMA.
Shorts:
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
SPG Inside day under the 10 DMA. Today’s high must not clear and today’s low must break.
AGN Watch for a breakdown or OR high failure under 88.83. Confirmed the bear phase today.
EXPE Watch for a breakdown or reversal under S1.
BPO Watch for a breakdown or OR high failure against the 10 DMA.
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 under S1.
Best wishes for your trading,
Geoff & Matt
