All I want for Christmas is my rally back! Instead, the volume indicator I waited for showed itself with a vengeance, posting a significant distribution day in volume in all indices. We saw and noted the reversal candles in the small caps or Russell 2000s, Dow and S&P 500 when they happened on December 2nd, but remained hopeful for new highs given that NASDAQ led the way thereafter. Last year, the Dow ended under the major moving averages, then began this year with a huge gap. Even if the market cannot come back before we end 2013, the real story from here on in doesn’t really begin until January 2014. The interest rates told a story-but the real saga begins if the TLTs break the 2013 lows. Who would have ever thought a government less than crippled would break the back of the small caps market at the very least? Ho ho ho!
S&P 500 (SPY) I believe the word is D-A-M-A-G-E. But, is the market still in a bullish phase? Totally. Subscribers: Negative Pivots in all
Russell 2000 (IWM) Weak unconfirmed warning phase. Shaken but not broken
Dow (DIA) Last week’s low is 157.83-that has to matter for something
Nasdaq (QQQ) Honestly, since the runaway gap on October 18th, this has met every correction with buying. Therefore, unless 81.35 breaks, have to view this as a correction
XLF (Financials) Just last week I wrote about 21.04
SMH (Semiconductors) Closed the gap from its runaway-back to the drawing board.
XRT (Retail) This sector will have division in the coming year-now, the 50 DMA is close enough
IYT (Transportation) The 50 DMA important
IBB (Biotechnology) 213 is where the run started from-now support to hold
IYR (Real Estate) This group has not looked good since May-doesn’t mean that the other groups shouldn’t have been bought-but if 6 months ahead of the curve on better economic numbers means higher rates-this group knew it
XHB (Homebuilders) Landed on the 50 DMA-very interested to see what this group does
GLD Rejected 122 but holding the reversal pattern from 12/03. Let the monthly close show the way
USO (US Oil Fund) Right back to a bear phase! Rejected those moving averages.
OIH (Oil Services) Weak warning phase and oversold
XLE (Energy) If I had a dollar every time I wrote about 2 inside days and the money it yields when traders follow the range break…
XOP (Oil and Gas Exploration) Approaching oversold
TBT (Ultrashort Lehman 20+ Year Treasuries) Took the budget deal to raise the rates
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:
HSP Retraced back to the 50 DMA or close 40.12 max risk should this clear 40.55 for maybe ½ swing position
CF Making the cut in spite of a slingshot high since today’s low is a good risk and over R1 and today’s high could give this a miniswing trade opportunity
SBAC Again, today’s low good risk with today’s high and R1 lining up-miniswing
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 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)
FITB Slightly negative pivots which means with an inside day, still has a shot over 20.45 with risk 20.00
KSS Putting this here, but would prefer to buy an opening range reversal against the 50 DMA
MPC Inside day. Today’s low max risk. 87.27 clears R1-miniswing
JBLU Really has to clear 8.53 and hold 8.20 to get going again
Category 4: (Rip Tide)N/A
Phase Change:
BEAM Couldn’t clear the 50 DMA, but if does, will look good
NTI Holding the 200 DMA making today’s low best risk with move over today’s high good entry
FNSR If today’s low holds, and clears R1 which lines up with today’s high, could be one to try for the 50 DMA again
Shorts:
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
FAST Had an opening range failure today but now, under today’s low continues to look vulnerable
CAM After hanging tough, if this breaks 54.50 pretty safe bet it continues south to 51.50. Risk to be determined
Bye For Now!
