It was another day of the market drifting. The volume in the SPY was lower today than pre-holiday trading on July 3rd, and we’re still 2 days away from the the the Labor Day holiday weekend. I suspect the next two days will be more of the same “wait for September” drifting action in the SPY, DIA, QQQ and IWM. I can’t promise the lack of volatility will end next Tuesday, but I’d bet it will be over soon thereafter.
Despite the lack of movement in our U.S. stock indexes, there have been some interesting moves worthy of your attention in EEM, TLT, and IFN which you can read about below.
S&P 500 (SPY) - More consolidation. Key support levels are 199.70 and 199.
Russell 2000 (IWM) - Tight consolidation after a big breakout day. 117.40-.50 will likely be resistance.
Dow (DIA) - Consolidation day, watch today's low.
Nasdaq (QQQ) -Very tight consolidation.
XLF (Financials) - Inside day. Still waiting for a pull back to 23
KRE (Regional Banks) - Big resistance at 39.30 including the 200 DMA.
SMH (Semiconductors) - Broke 3 day low and closed near high of the day. Was that the test?
IYT (Transportation) - Has 6 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) - Paused after 2 big up days. The 2014 highs are at 275.40. Looking for a pullback to support in the area of 270 to 268.60.
XRT (Retail) - Followed through on its breakout over the 2013 highs at 89.
IYR (Real Estate) - Another tight consolidation day on the 10 DMA, and sitting on a good support from 73.50-.30. I'll be look at this one closely tomorrow.
ITB (US Home Construction) - A tight 6 day range on the 200 DMA. 23.75 is the key low level to hold.
GLD (Gold) -Tight consolidation. 124 is the level to break on the upside. 123-122 levels are good support.
XME (Metals and Mining) - Very nice inside day. 44.05 is big number. Looks like it wants to go higher and the weekly picture is still explosive.
USO (US Oil Fund) - 6 days of consolidation. It's ready to move. I'll focus on the long side. 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) - Not surprisingly, pulled back from the 50 DMA. Should hold above 76.60.
FCG (First Trust ISE Reserve NatGas) - Confirmed accumulation phase and consolidating under the 20.90 - 21.00 level which is the important level to break.
TAN (Guggenheim Solar Energy) - Pulled back and stopped near the 10 DMA. The bigger support is at 43.
TBT (Ultrashort Lehman 20+ Year Treasuries) - TLT - In the last week this has rallied from 116 to the highs created by news of fighting in the Ukraine, 118.36. This is acting like a strong bull phase.
UUP (Dollar Bull) - Pull back day from the 22 level that 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) - Followed through on a big weekly breakout, a pull back would be a nice opportunity. Key levels of support are 45 and 44.50.
IFN (India Fund Inc.) - Finally broke 26 and closed on the high of the day.
EWW (Mexico) - Inside day. But 71 is the support I'd focus on.
FXI (China Large Cap Fund) - Pulled back under the 10 DMA. Stuck in a range 40.65 - 41.58
CORN (Corn) - Sitting near the low end of consolidation range
JO (Coffee) Followed through on yesterday's breakout but the open was the high of the day. 38 was a pivotal area today
* * * * * Picks * * * * *
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:
IFN - Broke out. I like it with and entry under 26.10 and stop under 25.65 or even 25.37 for a long term swing trade.
HOT - Looking for breakout over 84.60 daily consolidation
FTI - Confirmed bull phase. Prefer ORR against 61. Max risk 60.77
SPWR - Looking for breakout over 38.25
RHT - Strong stock at the 10 DMA and big vol area. Must breakout over FTP level of 61.40 and have stop under 60.90.
GT - Like it as a swing with a stop under 24.90
IPG - Like it as a swing trade with stop under 19.60
GS - 177 is a big level and I'd like to have that in my stop. Pivots are negative so should not enter below 177.75.
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)
JNJ - Must be over 103.30. Max risk 102.67
ITB- Might consider if can risk under 23.75. Must be over 23.86
SODA - Like a trade with stop under 33.30.
Category 4: (Rip Tide)
Phase Change:
F - Unconfirmed bull phase. Look for ORR against 17.30 Max risk under 17.15
IP - Looking for ORR around 47.90.Solid support at 47. Max risk 46.75. Looking for ORR against 47.47
WFM - Watching for pull back where I can have 38.80 in my stop
Shorts:
Category 5: (Titanic) Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
SINA - Looking for ORR against 46.10. Max risk 47.
GE - Max risk 26.40
Category 6: (White Cap)
N/A
Best Best wishes for your trading,
Geoff Bysshe
President
MarketGauge
Filling in for...
Michele Schneider
