As the week began we had 2 technical patterns on our minds. First, the possible reversal candles in the indices from last Friday. Second, the volume as a main feature to show which way this market would go in the near-term. Looking at the small caps or Russell 2000s, both scenarios played out. The reversal candle from last Friday is in place with next support 111.00 or exactly where the recent ran up began from. Volume was not above average; however, did exceed significantly the volume from last week to post a distribution day (or when the volume exceeds the volume of the day prior and the close is negative.) Gold, which I have been very negative on as readers of this daily can attest to, sank below a major monthly moving average. Interest rates firmed which clearly had its impact. And, the other “tell” Real Estate, also closed on new 60-plus day lows. Maybe Santa is getting ready to trade his sled in for the new Mercedes SL in that hot red color, but if he is going high tech-he better hurry up!
S&P 500 (SPY)180.12 area now key support if this is to find its footing Subscribers: Negative Pivots in all except NASDAQ which has neutral pivots
Dow (DIA) Actually broke the fast moving average which means unless it can hold 159.50 and run back over 160-trouble
Nasdaq (QQQ) Joining the others in what could be its reversal candle-one trading day later
XLF (Financials) 21.26 the old 2013 high is the support to hold
SMH (Semiconductors) Couldn’t clear the 2013 highs from October and now has to revisit 40.80 to see if it can muster some strength
XRT (Retail) 87.70 some support if good
IYT (Transportation) Also a possible reversal candle
IBB (Biotechnology) Back in its own world and halfway into the projected move-expecting digestion though if the market is heavy
IYR (Real Estate) Unless this clears 63.50 could be seeing 60.00 around the corner
XHB (Homebuilders) The 50 DMA is key here now
GLD Gapped down and kept going south-looking at recent lows as next support
USO (US Oil Fund) Has an island bottom as long as 33.24 holds. Needs to clear the fast moving average
OIH (Oil Services) In the warning phase, 47.50 has to hold
XLE (Energy) Inside day.85.60 the 50 DMA
FCG (First Trust ISE Reserve NatGas) Subscribers: 20.00 pivotal
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:
BBBY If clears 78.90 area will clear a lot of congestion. It also has to hold 55.57
RCL 43.69 max risk and has to clear 44.00 then R1 and today’s high. Long term chart looks good
SYK If holds today’s low, then clears 74.40 then R1 today’s high looks good for possibly clearly 2008 highs
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:
DRI Although we exited to be conservative, over R1 would reignite the signal with a risk of under today’s low
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)
MDVN If holds today’s low, still like especially over 65.00
BKD Inside day. 28.85 now good risk and has to clear Friday high 29.39
BID Improved in condition. Has to hold 51.35 and over 53.00 level looks better
Category 4: (Rip Tide) N/A
Phase Change:
HSP Unconfirmed phase change to bullish. If holds the 50 DMA has a god shot of clearing the 80 monthly moving average later on
Shorts:
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
WFM Under S1 would short with stop over 57.07-still see this going to the 200 DMA at 52.50
Also watching MCD RHT QIHU
Bye For Now
