What do you get when you add a formidable trading range, a line in the sand moving average/phase change and an Italian Banker journalists are calling “one you can trust?”
I went down memory lane earlier today, thinking about inflation and how we really haven’t had any since the early 1980s, the days when buying soft andhard commodities were the gifts that kept on giving.
ECB projections (stated anonymously) show the announced measures by Draghi should boost the euro area’s inflation rate by 0.4 percentage point this year and 0.3 percentage point in 2016. It’s been 35 years since out-of-control inflation headlined the economic news.
That makes me wonder if Janet Yellen will consider a more hawkish stance vis-à-vis US interest rates and let them firm up a bit if she doesn’t have to worry as much about a global recession or deflation.
I ask that as the long bonds dropped today although managed to hold on to the key support at 132.50. (TLTs).
The real juice from the ECB action came in the form of the unconfirmed positive phase changes in all four indices. Like with The Beatles, go ahead and choose your favorite, they all pulled together to make sweet music on Thursday. Personally I like Ringo, the drummer, or how I see the small caps, Russell 2000s. However, Lennon or NASDAQ led the band impressively thereby winning the race as the closest index to test and maybe take out the January Range high 104.20 as the week ends.
By the time Ringo gets to sing the only 2 songs he wrote for The Beatles(Don’t Pass Me By and Octopus’s Garden), NASDAQ will most likely be on new highs.
Where does that leave Paul and George? Paul as the S&P 500 should keep pace with John (QQQs) for the lead. George (the Dow) should lend a spiritual influence and get the numbers back over 18,000 which will make everyone sing “Here Comes the Sun.”
S&P 500 (SPY) Unconfirmed Bullish Phase 204.75 the 50 DMA this needs to defend to confirm the better phase. January high 206.88 Subscribers: Positive pivots
Russell 2000 (IWM) Unconfirmed Bullish Phase 117.23 the 50 DMA this needs to defend to confirm the better phase. January high 120.56 far
Dow (DIA) Unconfirmed Bullish Phase 176.82 the 50 DMA this needs to defend to confirm the better phase. January high 179.23
Nasdaq (QQQ) Unconfirmed Bullish Phase 103.27 the 50 DMA this needs to defend to confirm the better phase. January high 104.20
XLF (Financials) Cleared 23.75 yet still far from the 50 DMA at 24.30
KRE (Regional Banks) Saved by the ECB but still with overhead resistance
SMH (Semiconductors) Here is another sector that cleared the Calendar range for a new 2015 high, as expected
IYT (Transportation) Close to the January high
IBB (Biotechnology) Already well above 310 which was its calendar range high.
XRT (Retail) Far from the January high but back to unconfirmed bullish
IYR (Real Estate) Turnaround to new highs
ITB (US Home Construction) If the market turns back down, I would go here first for shorts
GLD (Gold Trust) Another good close for the yellow metal
USO (US Oil Fund) In the end held 17.40 and the January low
TAN (Guggenheim Solar Energy) 2 Inside days after making new multi-year lows
UUP (Dollar Bull) 25.00 wow
EWG (Germany) 27.50 key support
FXI (China Large Cap Fund) Blast off
SGG (Sugar) Subscribers: Inside day under the 100 DMA
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 Over 16.00 would be good with S2 the anointed stop
TEVA (Reports February 5th) Has to hold 57.42 and clear 59.00 for a day to mini
FB Reports January 28th confirmed phase change to bullish and now has to hold today’s low-daytrade-also look for an ORR
BKD Big move. Now, an ORR or a move over 37.00 should bring this to new highs mini to swing
KSS (Reports February 26th) 59.90-60.00 support with a move over 60.50 good for perhaps a test to recent highs and beyond
Category 4: N/A
Phase Change:
STT Should report before open. Over 76.25 the support with a move over 77.06 clearing and confirming over the 50 DMA-a 2015 pick
PWRD Still waiting for this to clear 19.25 with the risk of the low of the day it does for a swing
GS Confirmed a brick wall bottom. Like on an ORR or move over today’s highs with a risk to 182.20
CIEN 19.15 has to hold and now, over the trendline so in play
GLPI (Reports February 19th) ½ position and will add over 32.56 the 200 DMA
AXLL (Reports February 18th) Calendar range breakout. Like risk to today’s low. Looks good to 46.00 or higher mini to swing
SUNE (Reports February 18th) Still under moving averages but if can clear 19.93 we should go in.
Shorts:
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
DTV 84.76 is the 200 DMA to break so in the meantime we will keep the stop in over 86.14
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
TOL 2 Inside day so lets keep eyes on this to see if breaks S1
Best Best wishes for your trading,
Michele Schneider
