Sheep will graze for an average of seven hours per day, mostly in the hours around dawn and in the late afternoon, near sunset. Sheep are very selective in their grazing habits. They eat grass, clover, forbs, and other pasture plants, but they especially love forbs. If you want to maintain good grass growth, you have to rotate pastures.
Goats have evolved with a greater ability to browse and to digest lower quality herbage than sheep. They are actually called “browsers,” which is a fancy word for picky eaters. They like variety yet unlike sheep, do not eat grass preferring weeds, bushes, leaves and if nothing else is around, will nibble on wood, wicker and your hair.
Since Metaphors R Us, let me put that in market terms after day one of the Chinese New Year or the Year of the Sheep/Goat.
The S&P 500 grazed for the full 6 ½ hours of the market’s session. To keepSPY well fed, the pasture (sectors and groups) rotated into certain tech stocks, forbs if you will, particularly cyber security (Fire eye) and social mediainstruments (Facebook).
The Dow “browsed” like a goat, with the December high eluding our picky eater.DIA dined mainly on weeds such as American Express, AT&T and ExxonMobile, but did at least find some good nibbling on IBM, Boeing, washing it down with Coca-Cola.
Main feature for both the goat and sheep (SPY and DIA) is their brethrenNASDAQ and the Russell 2000s kept the wolves (Volatility Index) at bay.
We want our sheep to grow an abundant coat of wool and our goats to produce a healthier dose of milk. For that, we need hay, which is like candy to both animals. For the market’s health and happiness, candy looks like solid earnings reports as we remain in the thick of earnings season, Fed policyreflecting a dovish stance yet with room for the rates to rise, the Greeks baring gifts, Cowboy Putin resting in the stable and Super-dude Apple trading at $130.00.
S&P 500 (SPY) 4 days of consolidation near the highs-looking for forbs. Subscribers: Negative Pivots in DIA, Neutral in SPY Positive pivots in IWM, QQQ
Russell 2000 (IWM) Another New high close
Dow (DIA) In need of hay to clear 180.71
Nasdaq (QQQ) Another New high close
XLF (Financials) 24.90 the January Calendar Range high, and needs to clear first 24.37 and hold 24.15 the 50 DMA support.
KRE (Regional Banks) Back through 40.12 so much better
SMH (Semiconductors) 56.64 resistance from December
IYT (Transportation) 165.17 January high
IBB (Biotechnology) New high close
XRT (Retail) Taking its time but is consolidating near the highs
IYR (Real Estate) Broke the 50 DMA for an unconfirmed warning phase
GLD (Gold Trust) Action suggests a move to 112 unless it clears 116.90
GDX (Gold Miners) 20.00 needs to hold
USO (US Oil Fund) I would be happy if this holds 18 and doesn’t clear 20 for a while longer
TBT (Ultrashort Lehman 20+ Year Treasuries) In spite of the FED rates want higher it seems
UUP (Dollar Bull) 24.70 support
EEM (Emerging Markets) Basing out
EWG (Germany) Resting above the 200 DMA waiting for a move over 29.28 then 29.50
FXI (China Large Cap Fund) Still long term bullish here
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)
TXT If holds 43.90 or even 44.60 like on an ORR or early move up for day
SWI ORR best now against 50.75 area
OC either an ORR or move above 40.42 is a good place to look for a day to miniswing trade
BKD over 37.23 is the place we are looking for an add
KKD Reports March 12th 20.75 max risk with a hammer doji for a miniswing trade
Category 4: N/A
Phase Change:
TSLA Unconfirmed phase change to Recovery. 209.80 area has to hold with lots of room if good
SLB If clears 87.74 then a possible add.
Shorts:
Category 5: N/A
Category 6: N/A
Best Best wishes for your trading,
Michele Schneider
