It was all about the Dow (DIA) as we have featured all week. After yesterday’s new 60+ day low followed by the close very near the intraday high, we noted that a gap over the 200 DMA would be something to follow.
However, was that enough? Let’s examine the consistent layers we give here every day. First, volume-we needed an accumulation to reverse the 5 strong distribution days the last two weeks. Did not happen. Second, phase-we needed a phase improvement in NASDAQ particularly since it is closest to the 50 DMA. Did not happen.
What did happen though concerning phase is an IMPROVEMENT in DIA. That crossing the 200 DMA helps some of the pressure for sure.
Sectors and groups-No phase change in any of those. Financials, XRT closed at 21.00-great bounce off the lows and a pivotal area to look at Friday after the jobs report dust settles.
All in all, best case, the start of something bigger and better. Worst case-the sellable rally before the market resumes the correction.
Also, the jobs report comes out tomorrow morning at 8:30 EST.
Palpable suspense!
S&P 500 (SPY) Confirmed a slingshot low today. Needs to clear the Feb. 1 high as a confirmation of strength. Subscribers: Positive pivots in all.
Russell 2000 (IWM) Of the major four, this is currently the weakest. It has the most work to do to get over the February calendar range. Indecisive, we’ll look for our confirming clues elsewhere.
Dow (DIA) The high of the February calendar range needs to clear at 156.76. The 200 DMA sits at 154.56 as support. Confirmed the slingshot low.
Nasdaq (QQQ) Clearly the strongest index. It is nearing the 50 DMA. If this takes out the Feb. calendar range, it will also enter a bullish phase.
XLF (Financials) Strong bounce after 2 inside days. Nearing the Feb. 1 high. Great news for the market if the financials recover.
SMH (Semiconductors) Close to taking out the 10 DMA and the Feb. calendar range. But, is heading into resistance at the 41.50 area.
IYT (Transportation) Needs to clear 131 to clear the 50 DMA and the Feb. calendar range.
IBB (Biotechnology) Inside day and one to follow if it breaks out. Could make a run for the roses.
XRT (Retail) This was the most beaten up ETF. Still in a distribution phase but, did take out the Feb. high. Accumulation day in volume but, still reason to be cautious.
IYR (Real Estate) Nice bounce out of the two inside days and took out the Feb. high. Not surprising considering the action in bonds. It is beginning to form a wedge pattern.
XHB (Homebuilders) Broke out of a trendline and cleared the Feb calendar range. Subscribers: This is on the move. 31.95 clears the 50 DMA and recent highs.
GLD Inside day. Serious consolidation in the recovery phase. Small wedge forming. Subscribers: This is consolidating under a major trendline and can have a forceful move in either direction.
USO (US Oil Fund) Wedged between the 200 and 50 DMAs. In a warning phase. Paused. We are watching for a break of the 200 or 50 DMA. 34.40 is support.
OIH (Oil Services) 46.26 is the upward sloping 200 DMA. Nice move today.
XLE (Energy) Pushing against the upward sloping 200 DMA. 83.65 takes out the Feb. calendar range and the 200 DMA.
XOP (Oil and Gas Exploration) Holding the upward sloping 200 DMA. 64.25 area should hold.
TBT (Ultrashort Lehman 20+ Year Treasuries) TLTs failed the 200 DMA-another puzzling piece of the puzzle
UUP (Dollar Bull) Holding the recovery phase. 21.67 is the 50 DMA that needs to hold.
KRE (Regional Banks) Subscribers: 38.37 clears the Feb. calendar range.
TAN (Guggenheim Solar Energy) Subscribers: 37.70, the 50 DMA should hold
CORN (Corn) Subscribers: Inside day
FCG (First Trust ISE Reserve NatGas) Subscribers: Inside day in an unconfirmed bull phase.
SGG (Sugar) Subscribers: Back in an unconfirmed Bear phase
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)
MRVL Watch for a breakout or opening range reversal with the 50 DMA as max risk.
ALXN Inside day. Needs to hold 153.72 and needs to clear 157.59.
CAT Watch for a breakout over 93.94. In a strong market, I would look here.
SPLK Inside day. Should hold the 10 DMA. Looks good over 80.
NBL Had a slingshot low today. Holding 65 week moving average. Watch for a confirm over today’s high.
HAL Watch for an opening range reversal against the 50 DMA.
Category 4: (Rip Tide) N/A
Phase Change:
PLD Prefer an ORR to control against recent highs (39.18)
WLP Inside day on the upward sloping 200 DMA. Also has a slingshot low. Big eyes here.
K Made a slingshot low today. Looks good over 58.15 (the Feb. calendar range)
FSLR Looks great over R1, pdh and the 200 DMA (which all line up)
KBH Moved into an unconfirmed phase change to Accumulation. Watch for a breakout or reversal aqgainst the 200 DMA.
TRIP Reports February 11th Watch for a breakout or opening range reversal over the 10 DMA, which also takes out the calendar range.
AMPE Over 8.65, looks good against the 50 DMA. Watch for an ORR or breakout.
Shorts: Focus on the ultrashorts if market fails
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
TFM 33.72 needs to break. Looks very heavy. Should not clear 35.
Bye For Now!
