In the persistent journey of the Fab Four and their January Calendar Ranges, post-Draghi, the week ended with only a brief visit by NASDAQ to the top of the January range. However, even though NASDAQ got high with the help of its friends, Amazon, Apple, Google, and Netflix, alas, the high was ephemeral as the QQQs could not close well enough for the range break to count for that much.
After all, the S&P 500, Dow and Russell 2000s never came close to the top of their January range. Question going into this week will be can NASDAQ hang on and lead the charge?
One positive is the confirmed phase changes in SPY, QQQs and IWM to Bullishmaking a closer line in the sand of support from the ultimate support at the January lows to the levels of the 50 Daily Moving Averages (see notes below.) The Dow closed below the 50 DMA and back into an unconfirmed warning phase.
That tells me to watch for either SPY, IWM failing those 50 DMAs thereby dragging NASDAQ along with them or, for SPY, IWM and DIA to begin this week holding the 50 DMAs with NASDAQ on lead guitar, clearing 104.20 once and for all, striking up the rest of the band!
Speaking of Calendar Ranges, the interest rates or long bonds (TLTS), came real close to the top of its range on Friday. 135.03 is the January Calendar Range high. Simply put, we use the first 10 trading days of January, look at the intraday high and low that was put in place, and then weigh significance on which way that range breaks as statistically (historically) in favor of a decent follow through over the next few weeks to months. Essentially, a break above has statistically revealed follow through for a rally, conversely, a break below for further correction.
Noteworthy, Oil (USO), closed below its January Calendar Range.
In years past, I have studied these ranges, but it seems that this year in particular, the range has some real legs!
I began the year speculating that we might be range bound, but now I ask for how long? We traders have a real roadmap to follow. One that requires a lot of patience as the indices travel in between the highs and lows.
The whole market thus far could be also in tandem with my 2015 Chinese New Year “sheep” theory. Think of sheep grazing peacefully, occasionally getting sheared, sometimes dodging wolves, but typically hanging out with the herd.
S&P 500 (SPY) confirmed Bullish Phase with an inside day 204.77 the 50 DMA. January high 206.88 Subscribers: Positive pivots
Russell 2000 (IWM) confirmed Bullish Phase 117.24 the 50 DMA to defend. January high 120.56 far
Dow (DIA) Unconfirmed Warning Phase with an inside day 175.82 some support. 176.83 the 50 DMA to get back above. January high 179.23
Nasdaq (QQQ) confirmed Bullish Phase 103.32 the 50 DMA to defend. Posting as closing above 104.20 (104.26). Big eyes here.
XLF (Financials) Held 23.75. Still far from the 50 DMA at 24.30
SMH (Semiconductors) 55.16 is the January Calendar Range high-now pivotal as we start the week.
IBB (Biotechnology) Still strong like bull
XRT (Retail) Confirmed the bullish phase
IYR (Real Estate) Closed slightly down from the new highs
ITB (US Home Construction) If the market turns back down, I would go here first for shorts especially after Friday’s action
GLD (Gold Trust) I’d say more resting
USO (US Oil Fund) Time to fill up the car
TAN (Guggenheim Solar Energy) Over Friday’s high will be a good follow through to the Friday rally
UUP (Dollar Bull) Over 25.00 wow
EWG (Germany): 27.50 key support
FXI (China Large Cap Fund) Inside day near the highs
SGG (Sugar) Subscribers: Still causing cavities
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)
BKD Like this with the inside day with a move over 37.00 a good start to follow. Risk 36.11
EXPE Reports February 5th. Big day Friday and now like if holds around 86.80 the 50 DMA for mini
ETR Reports February 5th Inside day. Like over 90.00 with risk to 88.70 mini to swing
KSS (Reports February 26th) 59.80-60.00 support with a move over R1 good for perhaps a test to recent highs and beyond
Category 4: N/A
Phase Change:
PWRD Still patiently waiting for this to clear 19.25 with the risk of the low of the day it does for a swing
GS If can back over 181.90 then good with risk to Friday low after the bottoming pattern
GLPI (Reports February 19th) ½ position and will add over 32.57 the 200 DMA
AA If holds 15.67 heard lots of options buying last week. We need to see a move over 15.97 for starters
GRPN If clears 7.57 the 50 DMA, like this with risk to 7.09
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
EL Under 73.00 has room down to 71.00 or lower miniswing best
XOM Back to a bear phase provided it doesn’t clear 92.36
TOL 34.04 resistance and now, under 33.18 weak
Category 6: N/A
Best Best wishes for your trading,
Michele Schneider
