I racked my brain on Friday to find the humor and present the weekend commentary in the usual joie de vivre. However, I found the persistent range rather sobering, leaving me well, humorless, (yet hardly at a loss for words.)
As a chartist since dinosaurs went extinct leaving all that fossil fuel, I look for and track significant trend changes through key reversals, volume, phases and multi-year trend changes on daily, weekly and monthly charts.
I’ve seen and reported on quite a few key trend changes over the last several years since I began this daily commentary and the presence on twitter. One notable call out was when Semiconductors, back in 2012 took out a channel on the monthly chart that went back 12 years. SMH to date has made a 58% move higher.
Another call out more recently is the solar sector or TAN, which after seeing quadruple bottoms over the last 5 months gave me the confidence to make the bold statement that solar energy has bottomed. Since then, solar has increased 9% and that was only since last week.
Now, I’m compelled to comment on the volatility index (VXX) and what could materialize from that chart. Typically, volatility declines throughout bull moves and rises throughout bear moves. Typically.
Volatility derives from unpredictability, especially assuming the worst. Last week I wrote about the range of human emotions in the market. We saw fear graduate into hope, which then deteriorated into worry. Volatile in the dictionary: uncomfortable, charged, explosive, inflammatory, turbulent. These are not the words one wants to consider for investing. However, we must consider these possibilities and look at what the VXX chart could be telling us.
First off, regarding price, the 100, 50 and 200 Daily moving averages all converge between 31.20 and 31.40. A twenty cent range with 3 powerful moving averages coming together is thrilling for a chartist!
Secondly, the phase of the Volatility index is Accumulation. Finally and most interesting is that the 50 is about to cross the 200 DMA for a Golden Cross. Not since 2012 has the 50 found itself above the 200 DMA. Then, the phase would change to bullish.
On Friday, the indices all tested the top of the January 6 month calendar range and retreated with volume. NASDAQ not only failed the January high, but returned to an unconfirmed warning phase. I’m not suggesting we brace for a huge sell off. Rather, I merely want to highlight that with volatility increasing as the indices tested resistance, the market persists in a range until further notice. 25 trading days and counting.
“You can have data without information, but you cannot have information without data.” Daniel Keys Moran
S&P 500 (SPY) confirmed Bullish Phase 204.39 now should hold or we go towards the lower end of the range Subscribers: Positive pivots in all but QQQs
Russell 2000 (IWM) Bullish Phase should hold 117.55 the 50 DMA
Dow (DIA) Bullish Phase the 50 DMA at 176.47
Nasdaq (QQQ) Unconfirmed Warning Phase Would be good to see this clear 103.14 the 50 DMA and stay there. If not, fair warning
XLF (Financials) 24.00 would be good to hold and back over 24.18 would be even better
KRE (Regional Banks) As much as I like this, it’s nowhere near the January high. Now, rather buy a dip around 39.00
SMH (Semiconductors) Unconfirmed Warning Phase with no real mind of its own now
IBB (Biotechnology) Support at 311
XRT (Retail) Inside day and good place to look for follow through to upside back over 96.00
IYR (Real Estate) Rates affect this sector
ITB (US Home Construction) As much as I like this, it’s nowhere near the January high. Now, rather buy a dip around 25.75
GLD (Gold Trust) Rate sensitive for sure. Held the 50 DMA with the 200 DMA the resistance
GDX (Gold Miners) Closed weak but holding the support around 21.10
USO (US Oil Fund) 18.50 support but now needs to clear the 50 DMA
TAN (Guggenheim Solar Energy) Quadruple bottoms since last October
TBT (Ultrashort Lehman 20+ Year Treasuries) TLTs Did not like the jobs report and chatter about when FED will raise rates-ok if they do but slowly Janet!
UUP (Dollar Bull) Back over 25.00
FXI (China Large Cap Fund) The gapper doing what it does-gapping-this time down
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 2 Inside days for a day to mini over 89.23
BID Reports February 26th Inside day with risk for more day to mini if clears 45.00
IGT If holds around 17.15 can look to add back the 1/2
PNRA Reports February 11th. This time if it clears 175 a decent daytrade.
BKD Shows why the 2015 picks are always worth watching. Has to clear 37.23 now and if gaps above go with it on a 5 minute or an ORR.
WMT Reports February 18th. If holds 87.00 then still think higher for a day to miniswing after its doji day Friday
Category 4: N/A
Phase Change:
KORS One more push follow over 73.32 then can risk to the 50 DMA at 72.74
CIEN March 5th. 19.15 support to hold for an ORR or buy over 19.50
AFL Held ½ with 60.38 area the right stop
YUM Inside day under the 200 DMA but still holding 73.45 key support if good.
XOM If holds 91.50 risk, can see a move over 92.91 for swing
SODA Reports February 25th Inside day. Tried the 50 DMA, retreated-but now look for an early take out of 20.22 for a miniswing
Shorts:
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
IACI 59.11 to break for a day to mini max.
GILD If this breaks 96.00 the 200 DMA good for a miniswing maybe swing risk
Category 6: White Cap-Having a 2-3 Day correction over the pivots. In a Negative Phase, Positive Pivots. Can sell an Opening Range High Failure if happens below R1 or previous day high whatever is higher and/or weakness if breaks S1 and prior day’s low
GOOG still watching for a move below the 10 DMA and S1 with a swing risk over 538
Best Best wishes for your trading,
Michele Schneider
