With the top of the January Calendar Range so close in all of the four indices, I have two songs in my head. The title song since paradise happens if those highs are breached. But also, Carole King’s song “So Far Away”, since like the lyrics suggest, “Long ago I reached for you and there you stood. Holding you again could only do me good.”
Here are the magic numbers translated into the corresponding ETFs: S&P 500206.88, the Dow 179.23, NASDAQ 104.14, Russell 2000 120.56.
What makes the anticipation of a rally through the January highs (please note intraday moves are not enough-needs to close there in at least 2 of the indices), is that the market has traded within the range for 25 days thus far. If you think simple physics, the longer something is compressed, the bigger the explosion once the lid comes off.
However, might I also present another reality that holds slightly less than equal probability? We test the highs of the range, even pierce it for a day and then fail since the trading range might also be just that-a range that gets tested (as it did on the low end in SPY, DIA) but ultimately gets respected as resistance.
Interest Rates firmed or Long Bonds dropped on Thursday which helps. Oil (deflation fears), abated and held where it needed to; yet, needs another push over 20.00 (USO) to sustain. The Financials (XLF), cleared 23.77 handily although remain in a warning phase for now. Even more impressive, the performance in Regional Banks (KRE), an area I believe has tremendous potential should the market hold steady in 2015.
Yet another song, same theme (“So Far Away” 14 Shades of Grey Album by Staid)
“Now that we're here, it's so far away
All the struggle we thought was in vain
An' all the mistakes one life contained
They all finally start to go away.”
S&P 500 (SPY) Unconfirmed Bullish Phase 204.44 now should holdSubscribers: Positive pivots in all
Russell 2000 (IWM) Bullish Phase should hold 117.51 the 50 DMA
Dow (DIA) Bullish Phase the 50 DMA at 176.46
Nasdaq (QQQ) Unconfirmed Bullish Phase Needs to hold 103.18 the 50 DMA.
XLF (Financials) Resistance now at the 50 DMA 24.18 with 23.77 support to hold
KRE (Regional Banks) Cleared everything and will look for an entry
SMH (Semiconductors) Unconfirmed Bullish Phase if holds 54.44
IBB (Biotechnology) 321.25 now resistance with support at 311
XRT (Retail) Cleared 96.00 intraday and closed right there
ITB (US Home Construction) Held 26.16 and now has an inside day
GLD (Gold Trust) Over the 200 DMA so worth watching.
GDX (Gold Miners) Over 22.70 could be start of a good move higher
USO (US Oil Fund) 19.50 resistance and 18.50 support
OIH (Oil Services) About to break the 50 DMA
XOP (Oil and Gas Exploration) Like this best in the oil and gas groups
TAN (Guggenheim Solar Energy) Quadruple bottoms since last October with an inside day
TBT (Ultrashort Lehman 20+ Year Treasuries) TLTs Lighter volume but still showing a top in place
UUP (Dollar Bull) 24.70 support which is holding into the unemployment number
EWG (Germany) Back through the 200 DMA and looking good
FXI (China Large Cap Fund) The gapper doing what it does-gapping-but looks good
RSX (Russia) Like over 15.87 the Calendar Range high with risk to 15.35
CORN (Corn) Subscribers: Basing-needs to clear 26.00
BAL (Cotton) Subscribers: Also basing
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)
DE Reports February 19th Inside day for a day to mini over 89.50
AVGO Reports February 25th Cleared the 10 DMA which now makes 104.85 max risk for day to mini
WMT Reports February 18th. If holds 87.00 then still think higher for a day to miniswing
Category 4:N/A
Phase Change:
CIEN March 5th. 18.80 huge support to hold for an ORR or buy over 19.50
AFL Might be the favorite for Friday since inside day over the 200 DMA so if clears 61.28 have swing risk to 60.00
PM If holds 82.00 max risk, then 83.60 is the 50 DMA to clear for a swing
YUM Filled gaps, reported and cleared the 200 DMA. Now, if 74.25 holds, and today’s high clears could be back to 78-80.00 Swing
XOM Quiet day under the 100 DMA. If holds 91.40 risk, can see a move over 92.95 for swing
SINA Reports February 24th. confirmed recovery phase with an inside day. Like if holds 36.80 and clears 37.79
SODA Reports February 25th Tried the 50 DMA, retreated-but now look for an early take out of 20.05 for a miniswing
DDD Reports February 26th. If it clears 30.37 chance to see the 50 DMA and beyond for a miniswing
KKD Over 20.00 worth a mini to swing with risk to the low of the day it does take out 20
Shorts:
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
CBS Reports February 12th. Under 56.25 like for a day to mini
IACI Inside day near the lows-59.11 to break for a day to mini max.
Category 6: N/A
Best Best wishes for your trading,
Michele Schneider
