Goodness, be careful what you wish for right? I wished for drama. Thanks, I think!
Earlier this week we talked about tops. We mentioned that tops are as dramatic as bottoms. They need volumefor starters. Then, they have to have some other technical pattern. Most importantly is that they confirm with a second day pattern.
SPY could have put in a double top with 2013 high 184.94, Wednesday’s session high 184.95. The Dow (DIA)went back into an unconfirmed warning phase (as did the Financial sector XLF).
NASDAQ possibly posted a reversal candle. All of the aforementioned instruments had distribution days in volume (when the volume is greater than the day prior and the closing price is negative). However, the volumewas decent, not dizzying.
Henceforth, we need to see confirmation Thursday and with increasing volatility. The price pattern right here is sort of in no man’s land-would not necessarily go gang busters short and yet, if the market continues to correct, buy opportunities are premature.
S&P 500 (SPY) If this was a double top, confirmation will look like a trip below 181. Otherwise, we can say that all it did was work off overbought conditions Subscribers: Negative pivots in all.
Russell 2000 (IWM) Never got to the top of the February calendar range and now, its 50 DMA is 113.27 to hold
Dow (DIA) Could be just a correction to 159 or could be the start of a bigger correction. Unless it clears back over the 50 DMA and closes there.
Nasdaq (QQQ) Maybe brick wall high-maybe
XLF (Financials) Unconfirmed warning phase.
SMH (Semiconductors) In its own world, more paused at this point near the highs
IYT (Transportation) Confirmed warning phase, first to sell off on Tuesday and looking heavy again
IBB (Biotechnology) Possible reversal pattern if continues south from here
XRT (Retail) Confirmed phase change to warning-improvement
XHB (Homebuilders) Inside day and a good one to watch to defend the 50 DMA possibly
GLD Needed to see overbought conditions alleviated which is far as we are willing to say for now unless it really fails from these levels
USO (US Oil Fund) Overbought
OIH (Oil Services) 48.00 resistance
XOP (Oil and Gas Exploration) Inside day-good place to look
TBT (Ultrashort Lehman 20+ Year Treasuries) Through 72.05 wouldn’t fight it
PHO (Power Shares Water Resources) New highs then reversed
UUP (Dollar Bull) 21.60 an area to watch
EEM (Emerging Markets) Subscribers: 38.87 some support to break
FXI (China Large Cap Fund) 36.40 point to clear
TAN (Guggenheim Solar Energy) Possible topping candle
JO (Coffee) Subscribers: Look at chandelier exit again for 1/2
SGG (Sugar) Subscribers: Confirmed phase change to recovery
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) N/A
Category 2: (Pipeline)N/A
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)
HSP Compressed so worth keeping on list with 44.29 the best point to clear
Category 4: (Rip Tide)N/A
Phase Change:
NBL Tried to break over the compression, and now has to hold today’s low
AXL Great compression with a move over 19.60 a good one to follow with risk 19.00
ONVO Another one with compression and a tight range to clear one way or another
GOGO if holds today’s low is working a slingshot bottom
YOKU Like if holds today’s low and clears today’s high
Shorts: We have a SDS position on now-overall satisfied with how we are hedged long to short going into tomorrow
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
CHRW Has to break S1 and not clear today’s highs
AGCO Inside day and under Tuesday’s low and S1 should bring it down to around 45.00
Bye For Now!
