While the market traded in a range, I kept dreaming up ways to describe the range in the most entertaining yet informative way possible. With 20 trading days in January now gone, the six month January Calendar Range kept a perimeter or boundary around the indices thwarting them from making new highs or lows, EXCEPT in the Dow.
When the songs, poems, literature, imagery and extreme sports analogies dried up, I turned on Friday to Boxing or maybe more apropos, the World Wrestling Federation. Crazy thing is that the S&P 500 and Dow both had inside days (means uncertainty) last Friday, although the closes were near the lows with again, the Dow closing under the January Calendar Range low.
The Russell 2000s bucked big time (still the Year of the Horse) and dropped precipitously although remains above the January low at 114.20. NASDAQ tried hard to take the reins and with Apple, Netflix, Google and Amazon all super strong, almost succeeded yet could not cross the finish line.
Oil finally proved a blow off bottom could be in place although let’s give it one more day because it’s oil. If it really does stabilize watch how the market responds. Goldshot up as did the long bonds once again. I still maintain that oil is only one factor. Clearly the small caps and a blow off in interest rates with some firming action are 2 other important factors. Until we see a trifecta, going with the phases in the indices which are accelerating in warning.
Monday is Groundhog’s Day. Will the little bugger see his shadow? I’m guessing yes and he will retreat back into his burrow with winter weather persisting a while longer.
You see my friends, the imagery well has not dried up just yet, even if the market seems to be.
S&P 500 (SPY) Warning Phase Held January low at 198.55 with its inside day. Only a move over 202.70 can save it now Subscribers: Negative pivots in SPY DIAIWM Positive in QQQs
Russell 2000 (IWM) Unconfirmed Warning Phase Or the Cybil of the market. 117.30 the 50 DMA if it has another personality swing. Underlying support 115.30 with 114.20 the January low
Dow (DIA) Warning Broke the Calendar Range and yet had an inside day so a gap lower would mean a quick visit to the 200 DMA which corresponds with the December low
Nasdaq (QQQ) Warning Phase Held the 100 DMA so under 100.97 can see quick trip to January low 99.36. Over 102.10 much better
XLF (Financials) Under the 200 DMA in an unconfirmed distribution phase. If this clears back over 23.16 and closes above convincingly, that’s one thing. Otherwise, this weakness is concerning
SMH (Semiconductors) 52.30 some support and January low 52.07. Otherwise, if clears 54.30 much better
IBB (Biotechnology) Back below the January Calendar Range high but still in good shape
XRT (Retail) In the range but now back under the 50 DMA
IYR (Real Estate) Held 81.89 which is the support to hold
ITB (US Home Construction) Inside day and hovering on the 50 DMA
GLD (Gold Trust) Yes, it held the gap low and ran up into resistance at 123.30 which now must clear
USO (US Oil Fund) We can call this a low with huge volume of buying last Friday. Now has to hold 17.25
TAN (Guggenheim Solar Energy) Relative strength and now waiting for the 50 DMA to clear again
TBT (Ultrashort Lehman 20+ Year Treasuries) TLTs Doesn’t stop but doesn’t help either
UUP (Dollar Bull) 24.70 support
EWG (Germany): Looks the best of the Euro countries right now
FXI (China Large Cap Fund) Looked so good before Friday-now on the 50 DMA which if any good at all, should hold
BAL (Cotton) Subscribers: Has my attention-best I can say
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: (Pipeline) Positive Phase, Condition 2-3, 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:
MRVL Reports February 19th Took off ½ but still like if clears the 15.50 level early on Monday (will add it back). Risk on whole trade now is the 50 DMA
Category 3: N/A
Category 4: N/A
Phase Change:
IGT Reported and really, 17.10 is the place to clear 16.85 risk
FSLR Reports February 24th. If holds 41.95 worth a look over Fridays high
TSLA We have a small position and good stop but now, if can clear back over 206.38 might not be a bad add even though ultimately, 210 has to clear
Shorts:
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
DTV Reports February 19th. ½ position.
CBS Reports February 12th Under 54.05 looks like we could see 51.50 and over time lower
Category 6: N/A
Best Best wishes for your trading,
Michele Schneider
