Astronomers in Australia picked up an “alien” radio signal from space for the first time as it occurred back on May 15, 2014. Emerging from an unknown source, these bursts are bright flashes of radio waves that emit as much energy in a few milliseconds as the sun does in 24 hours. The cause of these mysterious signals remains unknown, with possible theories ranging from black holes to alien communication “We're confident that they're coming from natural sources, that is to say it's probably not aliens, but we haven't solved the case completely.” Emily Petroff a PhD candidate from Swinburne University of Technology in Melbourne, Australia.
As far-fetched as one would think this analogy is, the volatility index (VXX) I featured all last week, has been like a mysterious alien radio signal that I cannot ignore while one could probably surmise, is not coming from aliens.
While the market impressively closed the week substantially over the January 6 month Calendar Range high and the S&P 500 closed on new all-time highs, indicating a bullish bias at least until the end of June, I ended last week thinking that the market will continue to see small rallies met with selling followed by periods of consolidation, mainly because of what VXX appears to be relaying. However, unless we fail these calendar range highs, assume sell-offs are good buy opportunities.
VXX dropped right down into the converging moving averages after its earlier golden cross to a bullish phase. Then last Friday, it broke 31.20 briefly climbed over 2 of the 3 major moving averages then proceeded to close, with super lightvolume, marginally beneath all 3 of those moving averages.
Like a burst of bright flashes that emit as much energy in milliseconds as the sun does in 24 hours, I will continue to keep the volatility index in focus, even if it means wearing sunglasses so I can safely look up at space scanning for alien forces that might knock the wind out of the market’s strength.
Man, could I have too much fun with the topic of alien abductions, market probes and the like (think the book Communion: A True Story by Whitley Strieber). But, I will stop here and instead wish you all a wonderful 3-day weekend.
S&P 500 (SPY) 220? Subscribers: Positive pivots in all
Russell 2000 (IWM) New all-time high and really, could mean this is the year of the Russell
Dow (DIA) 180.71 high December 26th still calling its name. Otherwise, 179. 23 is the major support area
Nasdaq (QQQ) Highest it’s been since 2000. Party like its 1999 this weekend.
XLF (Financials) 24.90 the January Calendar Range high, 24.37 the support-needs to participate
KRE (Regional Banks) 41.06 the January Calendar Range high
SMH (Semiconductors) 56.64 resistance from December
IYT (Transportation) 205.16 January high
IBB (Biotechnology) 322.46 the January 6-month high which cleared already but now becomes pivotal
XRT (Retail) New highs and one I gave over 96.00 now trading over 98.00
IYR (Real Estate) Confused by strong market and firming rates
ITB (US Home Construction) Another one I gave a heads up on over 26.00, now on new multi-year highs
GLD (Gold Trust) Under 116.90 trouble ahead.
USO (US Oil Fund) 19.93 is the 50 DMA with 20.35 the 6 month January calendar range high
XLE (Energy) This has the best performance as written last week-now over Friday’s high should continue
XOP (Oil and Gas Exploration) Not a bad second to XLE if clears 53.90
TAN (Guggenheim Solar Energy) No sunscreen or sunglasses necessary
TBT (Ultrashort Lehman 20+ Year Treasuries) Unconfirmed bullish phase, first time since September 2014 if confirms
UUP (Dollar Bull) 24.70 support
EEM (Emerging Markets) Basing out-it’s safe, you can come out now!
EWW (Mexico) Subscribers: Confirmed recovery phase
EWG (Germany) Resting above the 50 DMA waiting for more confidence in the global situation especially with the Greek bailout deadline
FXI (China Large Cap Fund) Still long term bullish here
RSX (Russia) Wow
CORN (Corn) Subscribers: Watching the basing action here
BAL (Cotton) Subscribers: Should hold over 41.50 with best close Friday since November 2014.
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)
***NOTE: We have 15 positions on and at this point, want to start unloading with profits before adding anything more aggressively long.
WFM Inside day and still has lots of upside room if holds 55.88
IGT Using Calendar Range Highs, 17.29 is the number to clear on a closing basis is key
BKD Closed over the Jan Calendar high so now looking to add Tuesday on 5 minute OR breakout
Category 4: N/A
Phase Change:
XOM Wished I hadn’t missed the gap up last Thursday, but moving on, now over the 100 DMA so an ORR against 92.65 or a good open still in play
KORS ORR here works best or a gap over Friday’s high for a day to mini
SLB Now that it cleared 88.00 we can look for an add if holds-basing action suggests a move to 100 possible
THC Reports February 23rd Had a slingshot and is consolidating so could be worth a miniswing trade over 45.00
Shorts:
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
NKE Reports March 19th Inside day. Under 91.75 or S1 is best for a day to mini
Category 6: N/A
Best Best wishes for your trading,
Michele Schneider
