We dined with some friends Thursday night who are both in real estate and have very little knowledge or actual interest in the stock market, although they are always a great barometer of our local real estate market.
As Keith and I were explaining our “double-edged sword” theory on low oil prices-everyone is happy about that-and the Russia, Eurozone woes, it dawned on me that 2 powerful perceptions, now becoming market reality, have prevailed.
First, the US economy. Seems that the “domination” over all other countries has become palpable but more importantly relatively impervious on any sustained level to troubles overseas.
Second, declining oil prices. What began as fear about deflation and the collapse of certain economies dependent upon oil has now switched to “We love cheap oil! Bring it!”
That of course, makes me wonder about what happens if the oil market bottoms (the US Oil Fund USO rallied over 5% on Friday with Oil Service Holders OIHand Oil and Gas Exploration XOP not too far behind.)
If the oil market is bottoming, we can presume low interest rates have something to do with that. We can also presume that, since Technical indicators precede fundamentals, an announcement from OPEC cutting production might come along.
Regardless, with the short week ahead and the incredible rally last week, doesn’t seem like anything can dampen the holiday spirit. The small caps are close to 2014 highs (120.97 made July 2nd) while SPY DIA and QQQs are close to the much more recent (also 2014) highs.
My eyes will be on oil and solar as both sectors are undervalued with solar in particular perhaps the next best play as we enter 2015. The best advice I can give you is if you want to have a diverse basket across several asset classesin your portfolio, this is one of the best opportunities I have seen to make that happen. The classic leaders for the last 2 years-Biotech, Real Estate,Technology and Semiconductors should be represented already. Social mediais coming back after a long period down, oil, gas and solar stocks are worth looking at plus, there are great shorts out there as well. I will be completing myPhases and Forecast for 2015 very soon-an extensive (I love research and tend to fall down the information rabbit-hole easily) study of the near past and not so distant future with specific recommendations. If you are subscriber of any of our MG products, it will be yours for free.
USA, USA, USA!
S&P 500 (SPY) Doji Friday near the highs-seems like digestion-only concern would be a gap open lower that can’t recover. No way ahead of X-Mas!Subscribers: Positive pivots in all
Russell 2000 (IWM) Closed on new multi-month highs
Dow (DIA) Very similar comments to the ones on SPY
Nasdaq (QQQ) Unless this gaps below 103.25 and continues to fail from there, seems market wants higher
XLF (Financials) 24.45 key support if this is to continue
KRE (Regional Banks) About to have a Golden Cross
SMH (Semiconductors) Semis look a bit tired but that hasn’t meant much this year
IYT (Transportation) 162 major overhead resistance
IBB (Biotechnology) New highs as one would expect
XRT (Retail) Digested the new highs posted last Thursday.
IYR (Real Estate) Ended the week on new highs
ITB (US Home Construction) Amazing how well this held the 200 DMA on the correction and now, into resistance so must continue forging on
GDX (Gold Miners) Watch the 50 DMA for a phase change
USO (US Oil Fund) 22.54 is a good point to clear for more bottoming action if that is going to happen.
OIH (Oil Services) 35.50 great underlying support. 2 weeks ago it tested a channel on the weekly chart and then last week, closed above it-worth noting
XLE (Energy) Looks like OIH and maybe even better as it is closer to a potential phase change
TAN (Guggenheim Solar Energy) Subscribers: Plan has been to wait for the 50 DMA-probably best to wait for that
TBT (Ultrashort Lehman 20+ Year Treasuries) TLTs not done yet it seems-watch rates carefully
UUP (Dollar Bull) New highs-USA USA!
EEM (Emerging Markets) Maybe the whole emerging world is bottoming
IFN (India Fund Inc.) Inside day over the 50 DMA-interesting
CORN (Corn) Subscribers: Looks like its bottoming out
BAL (Cotton) Subscribers: Cleared the 50 DMA for an unconfirmed phase change to recovery
SGG (Sugar) Subscribers: Island bottom here -but didn’t have one in the futures
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: N/A
Category 2:N/A
Category 3: (Double Up) Positive Phase, Condition 1 through 4, Positive Pivots which means can either buy an 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)
AAL Inside day near the highs. Like if holds 49.73 the 10 DMA and clears 51.15 for a mini to swing
MU Has to clear 34.84 for a daytrade add
BKD Inside day near the highs-has to clear 36.18 and hold 34.90 as a swing trade
RCL 2 inside days but high weekly/monthly RSI so thinking day to miniswing max if breaks out over 81.72
Category 4: N/A
Phase Change:
VLO Unconfirmed phase change to recovery and a good potential to see a move to the 200 DMA should it confirm the better phase
ONVO Unconfirmed phase change to accumulation if confirms looks like a great base
SUNE A fave for Monday if this clears 19.97 and holds 19.23 for a swing
SCTY Confirmed phase change to recovery so like to see it hold 53.07 and like
SPWR and TAN, could be bottoming
TEX Hit the 50 DMA and if gaps above like it for a day to miniswing
MGM Still looks good so like now an ORR against 20.20
GLPI Inside day after a confirmed slingshot low like best over 29.20 for a swing
SFM Inverted hammer doji followed by a doji over the channel-first close over channel-love this one if holds!
BBRY Impressive reversal candle and wide range Friday-like over 10.07 risk swing
DDD Like over 32.04 with risk 31.20 swing
Shorts:
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
KORS Although it cleared the 50 DMA, te chart looks heavy and pivots are negative. If cannot clear 75.30, like the short under 74.25
Category 6:N/A
Best Best wishes for your trading,
Michele Schneider
