Wish I could say the January Calendar range rectified itself and we are now, fill in the blanks (Bullish Bearish or Neutral). On the other hand, the longer the range takes to rectify, the more powerful the signal shall be.
Concerning ranges, perhaps the biggest technical news (I wait with bated breath for the fundamental news) is the move in the long bonds or TLTs during Wednesday’s session. Early on, TLTs made a new high then reversed, closing near the intraday lows. Furthermore, the daily average volume was big enough to think blow off and the trading range a bit wider than the typical average true range.
I note this move for 3 reasons. First, is to illustrate the power of the ranges not only when the range is penetrated, but also the power of a move when the range is penetrated only to see it reverse. Secondly, to point out volume and trading range patterns at new highs on extended moves and what reversals look like. Finally, to put a bug in your head to think about why rates could bottom in the US in the face of the ECB rate announcement?
Another layer to the interest rate saga of course, as with any technical signal I see and write about, is we must have confirmation. Therefore, we will look for a continuation move lower on Thursday and if not, the aforementioned information on interest rates is nothing more than a way to look at ranges, range breaks, range break reversals, volume trading ranges and of course, CONFIRMATION.
These are the progression of steps I delve into for all instruments and especially now, during this exceptionally important time of the year- the January Calendar Range.
S&P 500 (SPY) Warning Phase 202 remains pivotal, 200 support and over 204.70 much better Subscribers: Positive pivots all EXCEPT IWM
Russell 2000 (IWM) Warning Phase 114.23 huge support and bottom of range. Now, has to clear 116.75 then 117.20 the 50 DMA
Dow (DIA) Warning Phase 173 support then 172 and over 175.35 better, over 176.77 better still
Nasdaq (QQQ) Warning Phase 101.35 pivotal, 99 big support and over 103.25 new ball game
XLF (Financials) Unless this clears 23.75 looks vulnerable
KRE (Regional Banks) Under 36.40 see lower in store
SMH (Semiconductors) Confirmed phase change to bullish with an uphill battle, but at least it lived to fight the battle
IBB (Biotechnology) Inside day after making new highs. Hopefully resting and not failing
XRT (Retail) Inside day and still under the 50 DMA
IYR (Real Estate) Reversed from the highs with interest rates a main focus for next direction
ITB (US Home Construction) Inside day
GLD (Gold Trust) Still strong although hasn’t cleared the weekly channel yet
USO (US Oil Fund) Not failing not rallying but a good range to watch between 17.40 and 18.00
OIH (Oil Services) Looks better over 33.20
TAN (Guggenheim Solar Energy) Inside day after making new multi-year lows
TBT (Ultrashort Lehman 20+ Year Treasuries) Watch for topping action in TLTs
EWG (Germany): Confirmed a recovery phase-Here is one that broke out over the January Calendar range which is bullish
FXI (China Large Cap Fund) Been expecting this to do what it did-on new multi-year highs now
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)
MRVL Will use S2 for a stop and like to see this clear 16.00 now
MDVN Inside day. Has to hold 105 and clear 112.82 for a mini to swing
VMC Now has to hold 67.13 for a day to mini
AAPL We have the miniswing on and now, stop will be under today’s low looking for a move over 112.07 the 50 DMA
LAMR Over 55.85 like for a day to miniswing for new highs with risk to 55.00
TEVA (Reports February 5th) Inside Day. Has to hold 57.06 and clear 59.00 for a day to mini
Category 4: N/A
Phase Change:
EBAY Reported. Like if gaps over 55.26 the 50 DMA. If not, still like over 54.67 the 10 DMA with risk to 53.75
PWRD Still waiting for this to clear 19.25 with the risk of the low of the day it does for a swing
CIEN One more push to get this over the trendline or over 19.29 with risk to today’s low for a swing
GLPI (Reports February 19th) Doji day, ½ position and will add over 32.57 the 200 DMA
FEYE Like to see this now hold today’s low to confirm the Accumulation phase
AXLL (Reports February 18th) confirmed phase change to accumulation. Calendar range breakout. Like risk to today’s low. Looks good 46.00 or higher mini to swing
FB Reports January 28th Unconfirmed phase change to bullish and now has to hold today’s low-daytrade
Shorts:
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
TOL Inside day so lets keep eyes on this to see if breaks S1
DTV 50 DMA big resistance 85.95 risk. Under today’s low lines up with S1 for a good mini to swing. Note the 200 DMA at 84.72 also has to break
AWAY If cannot clear 26.80 good for a day to miniswing trade down to 25 area
BAX Reports January 29th 72.00 max risk for a day to miniswing
Category 6: N/A
Best Best wishes for your trading,
Michele Schneider
