Reasons to be cheerful; reasons to be fearful. Perhaps the whole outlook needs to shift from black or white to dare I say it-shades of gray?
Before I go any further, I must give a shout out to the equities market and its nonstop source of entertainment last week. One of my New Year resolutions was to stop intensely watching ticks all day, given I would like my head to continue to sit in alignment with the top of my spine (chiropractor having fun with me lately), instead of the vulture head/neck thing that happens when one sits in front of a computer day in and day out.
But I guess I and the market will keep my chiropractor’s (and probably a massage therapist’s) pockets well lined since with 200-300+ moves on a daily basis, I find little else as compelling or fun!
That is not to suggest we do not have simultaneously legitimate concerns and strengths to consider in the macro picture. Both the S&P 500 andNASDAQ could not close out the week above the 50 daily moving average nor the 10 DMA. That puts them both back in an unconfirmed warning phases(needs a second day to confirm.)
The Dow and Russell 2000s though, did hold in now confirmed bullish phasesalthough both (all actually) closed down on the week. The long bonds roared and oil fell again. Add that up and you have what seems to be a mainly stock pickers market while the indices try to figure it out.
I wrote last week that we need to complete 10 full trading days in January to establish a significant calendar range, one we can most likely follow the break of one way or another thereafter. Until then, the “noise” waffles between soothing ocean waves and approaching tsunamis.
S&P 500 (SPY) Let’s talk slope. The 50 DMA is rising, the 10 DMA falling. The 50 DMA is more substantial than the 10. Overall, we are pretty much smack in the middle of the range between December high and January low. Short-term bias negative but intermediate and longer term bias still positive. Subscribers:Negative pivots in all
Russell 2000 (IWM) 117.10 the 50 DMA. What if we stay in a range between the December low and January high for a while? Should drive the analysts a bit batty-that would be even more fun.
Dow (DIA) 176.51 the 50 DMA and like the others, positive slope.
Nasdaq (QQQ) Friday’s low is important and so is 103.15 as a close range to watch
XLF (Financials) In the new year of stock picking thus far, fins are not where its at for longs
KRE (Regional Banks) An awful day on Friday
SMH (Semiconductors) Relative to the financial sector, semis remain a place to go for strength
IYT (Transportation) My guess is this will stay weak unless the market does something way more dramatic than swing 300 points a day in a range
IBB (Biotechnology) Held 310 that’s a good thing and still showing leadership
XRT (Retail) Possible double top at 97.15 and another sharp reversal down from there. Yet, still in a bullish phase. Another example of how mixed the sectors are right now making everything way harder to predict.
IYR (Real Estate) Held on as the leader with a new high close again
ITB (US Home Construction) Very strong although I might consider taking some profits after calling out this group all last week.
GLD (Gold Trust) New high close for 2015
GDX (Gold Miners) Same as GLD
USO (US Oil Fund) I was asked if this is bottoming. Not yet but will stay tuned
TBT (Ultrashort Lehman 20+ Year Treasuries) TLTs regained 130 making the huge volume perhaps not a blow off but warranted buying. Regardless, feel defensive therefore, part of the glass half empty feeling
UUP (Dollar Bull) Good volume and a sell off from the highs-no real concerns unless it breaks 24
FXI (China Large Cap Fund) Held 42.00 by the end of the week. Perhaps money going into China is a sign that US economy expectations for more growth has abated with room for this economy to catch up some
CORN (Corn) Subscribers: Monday is the biggest report of the year. The only time the Monthly Supply & Demand coincides with the Quarterly stocks.
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)
AXL 23.00 is pivotal and like this for a mini or swing if clears with risk to around 22.65-one difference is the slightly negative pivots
LNKD If clears Friday’s high looks good for a miniswing trade
PNRA It’s a thin stock so need to have a long view. That means has to hold 173, now 175 pivotal and should be really good over the recent highs for a swing
HUM Inside day 143.65 good risk and a contender for new highs for a miniswing trade.
VMC Inside day. Has to hold 66.32 and clear 68.64 a swing risk for the chance of new highs
HSP inside day and if holds 61.40, can see more upside over 62.37
Category 4: N/A
Phase Change:
GLPI 2015 pick and a great run on Friday provided the Friday low holds. Crossing a channel that goes back almost a year.
SUNE Over 19.95 clears moving averages with a swing risk of 19.10
ONVO back over the 200 DMA with a new risk now to 6.62 with a move over 7.10 swing
DDD Took ½ position and will not hesitate to add over the 50 DMA
FEYE Have a small position here looking for the 200 DMA to clear
BYD If holds 12.49 still a chance to see this continue higher over 13.00 and beyond
BZH Flagging on the monthly so best case now is a close over 20.00 or a buy closer to 18.75
EMC Looks good if holds 29.22 and clears 29.80 for swing
COH Confirmed phase change to accumulation. Has to hold todays low and clear 38.43-good swing trade
Shorts:
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
GOOG oversold but looks like it wants lower so a daytrade now best
AWAY also oversold but an inside day so on a weak mkt, good for a daytrade if sets up
AMZN Very heavy looking after an inside day. Under Friday’s low look at a day to miniswing
VLO Broke 3 converging moving averages with risk tight to 49.30 for a day to mini
QIHU In a weak market this will get weaker. Risk is 59.35 and could see new multi-year lows
Category 6:N/A
Best Best wishes for your trading,
Michele Schneider
