The market closing numbers for Monday represent even more diversion than they did last Friday. Most of the salient sectors and groups that drive the economy closed weaker. The financials, semiconductors, transportation, real estate and oil and energy sectors all closed red. Evenretail and biotechnology closed down. In fact, only the ultrashort to rates, TBTs and Oil and Gas Exploration closed in the green. I wouldn’t say there are any topping signs in the individual indices; however, keep yourself alert to 1) A blow off rally with double the average volume, 2) A reversal candle after new highs are made 3) An island top (gap up then gap down the next day) 4)Good old fashioned chart resistance such as a double or triple top. Otherwise, as we head into August with this low volume and basically choppy price action intraday, the best strategy will continue to be to trade individual instruments each on their own merit and make sure you can step back with a longer term view by noting the phases, risks and potential targets. Option 2 is to catch the quick momentum in a more daytrading/scalpers purview.
NOTE: I am heading out on vacation until Labor Day Weekend but you will not have any interruption of the daily as Geoff Bysshe, President and/or Matthew Mullins, Assistant Director of Trading Education and Research of MarketGauge will be filling in for me. Have a wonderful rest of August. Trade well!
S&P 500 (SPY) Inside day near the highs and with low volume to boot.Subscribers: Slightlypositive pivots in all indexes except DIA
Russell 2000 (IWM) New highs-a parallel universe to the sectors/groups
Dow (DIA)Inside day and resetting on the fast moving average
NASDAQ 100 (QQQ) Highest level since 2000 and another new high close for 2013
ETFs:
XLF (Financials)Sideways with the high candle from 7/23 still suggesting topping action until it clears with 20.65 key support to hold
SMH (Semiconductors) Inside day. After the peak high 7/17, we have a gap overhead and some solid resistance to clear with 38.20 level support to hold
XRT (Retail) Resting
IYT (Transportation) Correcting and trading inside the big green bar from August 1st
IBB (Biotechnology) Resting
IYR (Real Estate)Resting and not in a good way. Bear phase now after last week’s death cross
XHB (Homebuilders) Inside day. 31.06 next hurdle and 30.00 key to hold.
GLDFilled a gap from July 19th so has to hold here or resumption of the direction of the phase.
USO (US Oil Fund)The topping candle from 7/19 remains intact for now with some support at 37.50 now to watch for a hold
OIH (Oil Services)Overhead resistance
XLE (Energy) 84.00 is key
XOP (Oil and Gas Exploration) New highs and new high close since 2011
TBT (Ultrashort Lehman 20+ Year Treasuries) As this came in higher, it keeps the notion of higher rates more the sentiment of the market
FXI (China) Subscribers: Had an opening range reversal over the 10 DMA last couple of minutes. Watch this over R1
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
**NOTE: Suggest that you look into a straddle going out 2 weeks with options for a volatility trade in the indices as this will at some point, after lots of sideways, make a move one way or another.
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:
DDD Great compression and won’t stay here. As long as 46.50 the 50 DMA holds still like over today’s high and R1
Category 2: (Pipeline) Positive Phase, Condition 2-3, 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:
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)
NFLX Improved in condition. Cleared a lot of recent resistance over252.25 which is now a good support area. Has a slingshot high to contend with but like the risk.
TXN Inside day and still poised with risk the 10 DMA 39.24 for a new entry
K Inside day. Oversold, tested the 50 DMA max risk, and really like if this can clear R1 65.50
FDX 2Inside days and a great one to watch. To control risk S2 108.32 and today’s lows level should hold. Over 109.50 see room to upside
COF Has negative pivots so not a category 3. But keeping it here since it is compressing. 69.71 R1 if clears is goodalthough it now has to clear 70.00 and hold the 10 DMA 69.06
WAG Positioned and waiting for 51.35 to clear for next leg up. Like the stop now at 50.57
SHO Reports midday. But eyes herewith 12.70 closest area of support
Category 4: (Rip Tide) N/A
Phase Change and/or Slingshot Lows:
MAS Inside day.21.60 next obstacle and has to hold 20.65 level
TCK 23.70 area the max risk now. Like to see take out 24.57.
BMRN Not a condition 1 since slope on 50 DMA is declining. 2 inside days. 63.90 good risk if clears today’s highs
Shorts:
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
JOY Under today’s low is the 10 DMA and the risk is 50.50-3 tops there
OXY 88.68 level resistance. See this weakening since 2011 and if stays weak, can eventually break the 80 monthly
CAT Resistance at the 50 DMA 84.35. Looks heavy
Category 6: White Cap-N/A
Bye for Now!
