Prepared by Geoff Bysshe, and Mathew Mullins, filling in for Mish for Until August 30th.
Hi ~Contact.FirstName~
My August Office Hours Are Now 10:45 a.m. – 11:15 a.m.
This sound like a nice summer agenda to me:
Wake up around 6 a.m., have a light breakfast.
Head out for a 4 hour bike ride.
Get back to check the market around 10:45 to buy stocks at 11:00.
Set stops and automated end of day exits and head out to the beach.
Don’t laugh. So far this month, you’re looking like a genius if you simply bought the SPY at 11:00 (New York time) and then sold it on the close. Regardless of whether the market has gapped up or down this has worked. If you want to be perfect then the rule is to do nothing if the market has actually rallied nicely from its open to the 11:00 hour.
Put another way, the market has been sold from the open to the 11:00 hour then ground its way higher for the rest of the day. On a good day it ends on the plus side, but no guarantees. Welcome to a choppy August. Plan accordingly.
I won’t count on the 11:00 low for the rest of the month, but I will expect intraday trends to completely reverse. This means we need to pick our entries carefully and take advantage of the chop, and be patient!
After moving lower for about three days the markets moved higher today. Given that pattern I’ll have a slightly bullish bias tomorrow, but the key levels of concern in all the indexes are the recent swing highs and yesterday’s lows. If you want to get more granular than that, then the bears should sell a 5-min OR breakdown and cover at 11:00, and the bulls should buy any 5 minute reversal near 11:00 and sell on the close.
Subs: Pivots in all 4 indexes are now positive after 2-3 days of stepping down. This is quietly bullish so long as they stay over their pivots.
S&P 500 (SPY) Minor levels to watch are 170.50 and 169.50.
Russell 2000 (IWM) Never recovered the Wednesdays high once it broke below it. Beware of weakness below 104.
Dow (DIA) Still below the 10 DMA. Needs to clear 155.40 to be considered anything other than heavy.
Nasdaq (QQQ) Looks like it wants to go higher. 76.60 could be a pivotal level to trade against.
ETFs:
XLF (Financials) Held the prior day low after selling off from the gap up this morning. Could not clear the 10 DMA.
SMH (Semiconductors) Could not hold the 10 DMA after gapping above this morning. Closed above the 50 DMA, bringing this into an unconfirmed bull phase.
XRT (Retail) Doji day and closed above the previously mentioned channel.
IYT (Transportation) Holding support around 115.75 but closed just shy of the 10 DMA.
IBB (Biotechnology) Holding moderate support level around 195.00.
IYR (Real Estate) Bear phase now after last week’s death cross. Continuing its downward slide.
XHB (Homebuilders) Inside day.
GLDBig day today. Closed just under the 50 DMA. Subscribers: If this clears the 50 DMA, it can be a good buy opportunity with clearly defined risk.
USO (US Oil Fund)Gapped lower but held the 200 DMA.
OIH (Oil Services)Gapped up and held the 10 DMA. Recently over the 80 monthly.
XLE (Energy) Back over the 10 DMA.
XOP (Oil and Gas Exploration) Also back over the 10 DMA. Needs to clear 63.31.
TBT (Ultrashort Lehman 20+ Year Treasuries) Sliding lower and choppy.
UUP (Dollar Bull) Lowest level since June. Holding the June lows.
EWG (Germany) Subscribers: Needs to clear 26.86
FXI (China) Subscribers: Unconfirmed Recovery phase.
EWW (Mexico) Subscribers: Made a nice move up after clearing the 200 DMA.
SGG (Sugar) Subscribers: Confirmed the recovery phase.
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:
MCK Today’s low is the max risk. Watch for a break out over R1 or an ORR over FTP. Looks poised for a big move.
PEP Needs to hold the 10 DMA. Watch for a breakout or ORR.
CBST Needs to hold the 10 DMA and have a breakout or ORR over R1.
NEE Corrected down to the 10 DMA and held. Needs to hold today’s low and clear R1.
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)
UTX Watch for a breakout or reversal against the 10 DMA. Today’s low must hold.
AET Holding the upward sloping 50 DMA. Today’s low must hold. Look for a breakout over the 10 DMA.
GME Inside day and holding the 10 DMA after correcting down to it. Needs to clear today’s high and hold today’s low.
Category 4: (Rip Tide) N/A
Phase Change:
ARMH Sitting on 3 moving averages including, an upward sloping 200 DMA. The 200 DMA must hold. Watch for a breakout or reversal against support.
WDC Unconfirmed Bullish phase. Watch for a breakout or ORR against he 50 DMA.
Other:
OI Recently over the 80 monthly. Watch for an OR reversal against the 10 DMA.
OCN An Opening Range Reversal against the 10 DMA only.
ISIS Inside day holding the 50 DMA. Today’s high must clear and the low must hold.
ALKS Inside day. Needs to clear today’s high and hold today’s low.
DISH 2 Inside Days, very compressed. Today’s high must clear and today’s low must hold.
Shorts:
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
NTI Under the downward sloping 50 and 10 DMAs. Needs to break today’s low.
LINE Looks heavy and can see recent lows. Cannot clear R1.
EPD Broke down under support and looks very vulnerable. Cannot clear R1 or the 50 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 low.
Best wishes for your trading,
Geoff & Matt
