My colorful gauges to signal phase changes are brightly lit orange and yellow. Not only the colors of fall, but the colors of the market freefall.
The drop was orderly all things considered in that the indices took out Friday’s lows and headed south with no real discernable bounce throughout the session. Of course that will eventually provide great buy opportunities. We are, after all, an optimistic and hopeful people.
The amusing “green” in the sea of “red” per closing prices is AAPL. $500 seems pinned as the next great pivotal number to watch.
Considering we now have five significant distribution days in volume in the indices, no thinking we see a complete bottom anytime soon. But, for a discernable bounce-here is what we can watch for:
What does a bottom look like? New lows, typically a 60 day or more new low, a reversal from the lows intraday, with double or more average the volume, followed by confirmation the following day.
Where would I start looking? Probably (besides individual instruments) the Dow (DIA), especially if it can clear back over the 200 daily moving average.
S&P 500 (SPY) Now oversold on the weekly relative strength indicator. The high from September 19th was 173.60-some minor support to watch for now Subscribers: Negative pivots in all
Russell 2000 (IWM) We put our money where our mouth was and sold this index under 111.09-Now, 107.43 the September 19th highs support with a move over last week’s lows-maybe reason to think worst over for now
Dow (DIA) Watching the 200 DMA now for a return visit
Nasdaq (QQQ) My eyes did not beseech me-failed the 50 DMA, although in the best shape of the four
XLF (Financials) 20.39 the 200 DMA
SMH (Semiconductors) Watching 40.00
IBB (Biotechnology) One could see that the peak high is in from last week, but this is the only bullish phase in the major sectors left
XRT (Retail) I gotta think we are near a temporary bottom making this best candidate for a bounce
GLD Just like the last rally, it seems to my eyes, this should have done better as the “safe” haven
USO (US Oil Fund) Subscribers: 34.50 now a big pivotal area to watch tomorrow
TBT (Ultrashort Lehman 20+ Year Treasuries) TLTs confirmed phase change to accumulation
TAN (Guggenheim Solar Energy) Subscribers: If holds 36.66 and clears back over the 50 DMA, 37.78, tempting
CORN (Corn) Subscribers: Tested but still not above the 50 DMA on a closing basis
JO (Coffee) Subscribers: Would expect some digestion
SGG (Sugar) Subscribers: Watch for a move back to 52.00
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
NOTE: A good time to be extremely patient and selective. A major focus will be on individual instruments that either outperform and hold a major moving average or fail the moving average, but come back through with a slingshot pattern on good volume
Category 1: (Aloha) 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:
BHI R1 has to clear but this held up well
Category 3: (Double Up)N/A
Category 4: (Rip Tide) N/A
Phase Change:
AAPL I don’t have clean numbers to give you but 500 certainly pivotal with positive stack on the FTPs
WLP Interested in this after the slingshot low a hold of the 10 and 200 DMA with R1 and today’s high good points to clear. For swing have risk to under the 200 DMA
KBH Only if clears today’s highs would I be interested
Shorts:
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
ANF Reports February 26th If cannot clear the 50 DMA 34.14, then could see 30.00 or lower
SLB As with anything beat up after today, like to see either an opening range high failure, or a gap down with tight risk to the high of the gap. This looks set to hit the 200 DMA
Bye For Now!
