Prepared by Geoff Bysshe, President of MarketGauge, filling in for Mish until December 8th
Sometimes the simplest explanation is the best. I wish it was always this straight forward.
Yesterday 3 of the 4 market ETFs (all but IWM) retraced to their 10 DMA and today they held up. The Q’s had and inside day which I see as consolidation, and the DIA and SPY bounced closing over their prior day’s high, which is bullish. The DIA actually put in a new closing high for the move.
The IWM is weaker in the big picture, but in the context of the last several days it held its support and bounced with the other indexes.
In conclusion, the major trend is up, the last one or two days (depending on the index) corrected against the trend, and today the market consolidated or resumed the uptrend. Don’t fight it. Follow strength.
However, I still remain concerned about the market’s bearish condition in the new high / new low area. In fact, the last two days have seen more new 52 week lows than new highs in both NYSE and NASDAQ while the indexes sit one good day away from multi-year highs. This is very dangerous. For this reason any decline below Monday’s lows should be viewed as a dangerously bearish inflection point.
Until then… It’s December. Happy Holiday’s for the bulls.
S&P 500 (SPY) A positive consolidation day back toward the highsSubscribers: Positive Pivots in all
Russell 2000 (IWM) Held the 200 DMA with a nice correction back to the 10 DMA
Dow (DIA) A new high close
Nasdaq (QQQ) Inside day near the highs
XLF (Financials) New high close holding the range of consolidation
KRE (Regional Banks) Inside day accompanied by a phase change to accumulation
SMH (Semiconductors) Holding strong but getting tired?
IYT (Transportation) Held the support at 160.60 with an inside day
IBB (Biotechnology) A new high close but looking extended
XRT (Retail) Held support at 92.00 but still looking a little heavy
IYR (Real Estate) Tested the support at 76 then rallied to resistance at 77.02
ITB (US Home Construction) Inside day straddling the 10 DMA. Looks to be flagging
GLD (Gold Trust) Failed to confirm the phase change, gapped lower then had a tight range all day
GDX (Gold Miners) Remains in a bearish phase with an inside day under the 10 DMA
USO (US Oil Fund) Quiet. Needs to break its current range one way or the other!
OIH (Oil Services) Still down
XLE (Energy) Could this be the bottom?
XOP (Oil and Gas Exploration) Quiet!
UNG (US NatGas Fund) Continued to break down, next support at 19.68
TAN (Guggenheim Solar Energy) Subscribers: Still think this could clear the 50 DMA.
TBT (Ultrashort Lehman 20+ Year Treasuries) TLTs Gapped lower and held at the 10 DMA
UUP (Dollar Bull) New multi-year high close
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:
NWL A nice correction back to the 10 DMA like best over 36.00 with risk to 35.70
TJX Inside day and a nice 2 day correction needs to clear 65.84 with risk under PDL 64.72
APD Four days under pivots, held the 10 DMA and the runaway gap with an inside day, needs to clear 144.56 with risk under 142.95
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)
DUK Getting a little extended but still in play, inside day, now needs to clear 82.74 like best as a daytrade
CHKP 2 Inside days near the highs needs to clear 77.01 with risk to under 76.30
F Compressed against the 200 DMA for about 11 days needs to break out of this range and clear 16.01 like best as a day to mini
IDCC A month of compression and a nice bull flag on the weekly chart. Needs to clear 51.29 to clear all the resistance like best with swing risk
Category 4:N/A
Phase Change:
BAX Like best for an ORR against 72.92 with risk under 72.69 the 200 DMA
BSX Held the 200 DMA with an inside day now needs to clear 13.04 with risk under 12.82
BAC Needs to hold 16.93 the 50 DMA and confirm the phase change to bullish. Like best for an ORR.
MRVL Phase change to accumulation. Now needs to hold 14.43 the 200 DMA. Like best for a breakout over PDH 14.52 with risk under the 200 DMA
Focus List: AAPL, PRU, EQR
Shorts: Focus List: QIHU, WYNN
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
GOOG A move under 529.80 breaks recent support with a risk to PDH
X An inside day on the 200 DMA needs to break 30.91 and then 30.75
EQT 2 Inside days now needs to break 89.14 with risk to PDH
Category 6: N/A
Best Best wishes for your trading,
Michele Schneider
