Over the weekend Keith and I saw three films (end of year push so we are prepared for the awards season!) Birdman we loved! To sum it up, it covered what actors, though really all of us, go through in life-self-loathing contrasted by hope that we survive long enough to make a difference. Add to that a solid dose of our lighthearted revelry mixed with our bouts of fear.
The Theory of Everything about Stephen Hawking tried hard to find an inspirational balance between Mr. Hawking’s personal life (quite the virile man!) and his scientific accomplishments. Movie fell short on the latter, but certainly had one impressed with the devotion of the 2 women and 3 children in his life!
We also saw Dying to Know, about Timothy Leary and Richard Albert (Ram Das). Harder to pinpoint in a sentence, let’s just say that after the chronology of both men’s lives, death as a passage rather than the end was explored.
What does this have to do with the market you might be asking yourselves? Has the girl been drinking? Perhaps the intention is more a commentary about us traders. We all go through bouts of self-loathing and doubt, especially as we reflect on our yearlong performance during a slow low volume holiday period. (Could have been better, worse, I’m content, I’m not..) But, we survive on hope to combat fear and constantly dream of our next trades going really well. Before a new year in particular, we are most optimistic with the impending fresh start!
Traders do try for that healthy balance between a happy personal life and a productive trading life. And, if the balance goes off kilter, well, trading can suffer. As far as death as a passage, I prefer to use that as a metaphor for the market. “Death” or deep corrections or any sustained down move in the overall market or in a specific instrument is always a passage with the eventual turnaround. Patience and timing are key (better than death, which we typically cannot time well.) The Tibetans believe that death is the best preparation for life. If I can twist that into a metaphor, knowing we will have losing trades is the best preparation and affirmation for letting the winners run! And a solid, consistent strategy of course!
Happily, the market seems to want to sustain recent gains. The low oil prices continue to support a perception of “more money in my pocket, thank you very much,” interest rates are not ready to rise just yet and the Russell 2000s made new 2014 highs!
This is my final daily commentary for 2014. The next one will be available Sunday, January 4th, before we return to begin 2015.
We wish you all a wonderful, healthy, happy and prosperous New Year. I have thoroughly enjoyed bringing you my musings and analysis each day and look forward to another fabulous year together!
“We’ll take a cup o’ kindness yet, for auld lang syne!”
Peace out!
S&P 500 (SPY) 208.97 new 2014 high. Hard to read much with the low volume except to say it seems the market wishes to remain firm. 204.50 major underlying support Subscribers:Positive pivots in all except DIA
Russell 2000 (IWM) Made new 2014 highs and now should hold 117.60-118.00
Dow (DIA) Closed slightly red but not enough to worry about unless it breaks 176.44
Nasdaq (QQQ) Inside day and in the 106-103 range which at some point will break one way or another and show a clearer path
XLF (Financials) Made new intraday highs, closed on new highs-firm but lackluster ahead of the new year
KRE (Regional Banks) Like to see this hold around 41.00 for a clear neckline breakout on an inverted head and shoulders bottom
SMH (Semiconductors) Lagging behind so for now, not the place to be unless you want short setups if the market drops and this breaks 54.75
IYT (Transportation) Although chart doesn’t show it clearly, new 2014 high close
IBB (Biotechnology) 310 good area to cross
XRT (Retail) Rocked back to life and on new highs
IYR (Real Estate) Like it better if clears 78.50 holds 77.25
ITB (US Home Construction) 25 key support and over 26 looks very strong
GLD (Gold Trust) If I had to guess, I say much lower prices in store for 2015
USO (US Oil Fund) Anemic bounce mentioned led to new lows, expected
OIH (Oil Services) Through 38 perhaps more bounce
XLE (Energy) The 50 DMA is resistance point 82.83
XOP (Oil and Gas Exploration) 50.00 point to clear
UNG (US NatGas Fund) Possible bottoming reversal pattern
TAN (Guggenheim Solar Energy) Subscribers: That 50 DMA is what I am waiting for
TBT (Ultrashort Lehman 20+ Year Treasuries) TLTs 125.50 pivotal
UUP (Dollar Bull) Bam!
BAL (Cotton) Subscribers: 41.52 now support to hold if this is bottoming
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:
BBY Some call buying in here today. Could be flagging if clears R1 39.49 and holds today’s lows
EBAY Like over today’s high with a risk to 56.70 for mini to swing
Category 2: (Pipeline) 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)
IGT Lets watch for an ORR against 17.00 with lots of upside on this over time
MAS Inside day. Has to hold 24.78 and rally, clear 25.60 to keep going
WMT Inside day86.00 support now and over 87.15 looks higher to hard to say-uncharted territory. Swing
GERN Either want to see if holds 3.14 or clears 3.37
Category 4: (Rip Tide) N/A
Phase Change:
OC Needed to be on this at the 5 minute mark-now look for an ORR
SUNE Unconfirmed phase change to Recovery. But back over 20.00 looks good
ONVO confirmed phase change to Accumulation. Long ½ position which we can add to against 7.24 on an ORR
GLPI Basing-needs to hold 29.00- At his point waiting for the 50 DMA
SFM Over 33.18 clears months of work and now can use a risk to 31.88 for swing
DDD Will watch carefully for adding back the ½-especially if holds 31.95
TEX Confirmed recovery phase. Long term friendly and has to hold around 28.00
Shorts:
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
XOM Under the 50 DMA with resistance now at 93.67. Looks heavy under 92.45
AWAY If cannot clear 29.10 see a short under S1 since pivots positive 28.66 mini to swing
OVTI Broke S1 on a slow day and now 26.60 good overhead resistance with room to downside
SBAC Warning Phase and like under 111.94 with risk to 113.00
Category 6: White Cap-N/A
Best Best wishes for your trading,
Michele Schneider
