If the warp speed in which information travels these days has got themetaphorical planets (us) spinning wildly around the sun (the markets)-see Monday 1/12/15 Daily, which in turn impacts the market’s price movement to create crazy volatility, what does that mean for us? Did we get hit by a meteor, knocking us off our orbit?
Interestingly enough, as a market more range bound, albeit touching the boundaries of the recent lows and highs rather swiftly, the indices are still within the range from the December high to January lows as of Tuesday’s close.
The S&P 500 although trading below the 50 DMA (warning phase), I find the positive slope (which is still rising) reason to at least think we need to remaindelta neutral and not switch to a bias of more bearish or bullish right now. In other words, our portfolio is positioned fairly evenly long to short until a reason to switch to a more negative or positive bias becomes apparent.
Same applies to the Dow and NASDAQ-both held critical lows, with inclining slopes on the 50 DMA. The price of both are trading beneath the fast moving averages which are accelerating downward in slope. Now add this; the IWM or small caps had broken its 50 DMA intraday, giving me reason to think the lower end of the January range 114.36 is in the cards, UNTIL the last few minutes of the session when IWM roared back to defend the bullish phase.
Writing this out for you also helps me understand that other than continuing to expect a range bound market at least through Thursday, keeping neutral on asset allocation until then, loving the entertainment factor that high wild volatility brings us, yet avoiding reactionary trading, I at least keep my head on straight. Just like that bowling ball (head) on a stick (spine) my chiropractor reminds me to think about.
China, by the way, which I wrote last week is perhaps now where the upside potential is moving to, could also interpret as our market is chillin but not necessarily freezin.
S&P 500 (SPY) 200.50 next support which was Tuesday low. In order to at least say we could see the top of the range, we need to clear and close above Tuesdays high Subscribers: Negative pivots in SPY, Neutral in QQQs, Positive in IWM and DIA
Russell 2000 (IWM) Still in a range between the December low and January high. And held onto the 50 DMA.
Dow (DIA) Confirmed the warning phase
Nasdaq (QQQ) 100.69 support, then 99.00. Over 103.65 much better in the anything can happen market
XLF (Financials) Under 23.67 Tuesday low, not pretty with lots of earnings in this group coming up
SMH (Semiconductors) Gave a valiant effort to hold up but now, under 52.00 could shift everything to a more negative bias
IBB (Biotechnology) If this breaks 310 another negative
XRT (Retail) Possible double top at 97.15. 92.75 the 50 DMA
ITB (US Home Construction) I believe I wrote that if long Monday was the day to take profits-today is the day you probably got stopped out
GLD (Gold Trust) Will give this time to see if basing or just run to resistance once again
USO (US Oil Fund) Double the average volume, closed near top of range-could be reversal and bottom but we have seen this before so needs confirmation
XLE (Energy) Still defending the 2014 low
TBT (Ultrashort Lehman 20+ Year Treasuries) TLTs 132.61 now the high with a close under that interesting. 130 pivotal
UUP (Dollar Bull) No real concerns unless it breaks 24
FXI (China Large Cap Fund) The ETF is not easy to trade but the new high multi-month close is noteworthy
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)
KSS if holds 60.35 and clears 62 should keep going
BUD If holds 11.38 and clears 116 looks good for a super bowl run
Category 4: N/A
Phase Change:
GLPI Another day I would have loved to buy the ORR. Now, I still like this over today’s lows with risk to 29.25
SUNE Same here on the ORR on a scary day. If holds 19.92 still like this longer term
PWRD Sitting under the 200 DAM. If clears 19.30 and holds the low of the day it does it, then we have a swing trade (China stock).
Shorts:
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
CSIQ 23.27 max risk and looks like it is going to 14.80 the 80 month moving average under S1
UA We have ½ position and now, looks weaker under 67.11 for a possible day to miniswing add
Category 6: N/A
Best Best wishes for your trading,
Michele Schneider
