A fascinating dichotomy between sideways action in the indices (with the exception of the Russell 2000) which made and closed on new highs) and the Volatility index which also firmed.
Typically digestion days will shrink the volatility. That begs the question, “Why not this time?”
Another troublesome indicator is the emerging market weakness. With the US stock market so close to record highs, why are emerging markets weak? Flight to quality? Will the US dollar now begin to firm?
Why are interest rates dropping? So many questions, all intentionally rhetorical. But not really. A look at sectors, the weaker ones from the beginning of this year-Retail, Homebuilders, Real Estate, all performing well. Semiconductors have done exactly as I expected them to do.
The Financial and Regional Bank sectors have underperformed. And what about that Uranium up another 3.88%?
I see MC Escher paintings as I look around-particularly two-Ascending Descending and Relativity. Market imitating Art.
S&P 500 (SPY) Not quite an inside day but certainly a sideways digestion one. Waiting for the big move one way or another. It’s coming. Subscribers: Positive pivots in all but QQQ
Russell 2000 (IWM) New high close here-if this gaps higher, that runaway gap could be explosive
Dow (DIA) Above 162.79, this will be hard to argue with
Nasdaq (QQQ) Sideways
XLF (Financials) Confirmed weak warning phase-trying to make up its mind
SMH (Semiconductors) Strong
IYT (Transportation) Also lagging along with Financials
IBB (Biotechnology) Resting
XRT (Retail) Confirmed bullish phase
IYR (Real Estate) Good consolidation at these levels
XHB (Homebuilders) Fabulous day here and onto new highs
GLD Closer it gets to 126 the better a new entry will be for controlling risk
USO (US Oil Fund) Hasn’t been over 37.50 since October 2013-finding that area resistance but doesn’t look like it for long
OIH (Oil Services) Sideways
XOP (Oil and Gas Exploration) Worked off the overbought condition with good support if today’s lows hold
TBT (Ultrashort Lehman 20+ Year Treasuries) TLTs confirmed back over the 200 DMA
PHO (Power Shares Water Resources) Looks great
UUP (Dollar Bull) 21.52 a pivotal area
EEM (Emerging Markets) Subscribers: Still looking heavy
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)
JCP Reported and will like if gaps over 7.00 the 50 DMA
AA ORR now the better choice if didn’t buy today over 11.79
YUM We have the position now for a mini to swing trade after booking ½ ATR. Now, over 74.00 could really get moving.
FITB Really like this over R1 and 21.75
DOW Perhaps we can add if has an ORR
PLD 41.35 is the high to clear with a still relatively new one clearing longer term moving averages-more miniswing since risk now far
Category 4: (Rip Tide) N/A
Phase Change:
SODA If holds 38.60 still has the possible bottoming setup
GOGO If holds 20.00 still set up with the bottoming candle
X Potential Brick wall bottom if holds 24.10 area-good retracement on monthly chart too
YOKU Could get sympathy move with BIDU if crosses the 50 DMA 30.95 after it had a slingshot low February 5th
Shorts:
VXX Plan to have 2 stops ½ under 41.33 and ½ under 40.37
Bye For Now!
