17 days and whaddya get? Another day older and a market verklempt! (All worked up, on the verge of a breakdown.)
Operative word here is VERGE as in that’s what the Dow in particular looked like as Tuesday’s session began-on the VERGE of a breakdown. Yet, thanks to thesmall caps, (IWM) our Ringo Starr of the market, the Dow held the January Calendar Range low firming from early on down nearly 400 points to closing down 290.
So how many ways can I express the trading range of 2015 and its incredible viability until the day (and it will come) that it breaks up or down? I’ve tried songparodies (Mr. Ed), comparisons to the Beatles (The Fab Four), Clichés (Glass Half Full/Empty), definitions to combat hysteria by describing the 6 month Calendar Range and its statistical significance, and last but not least, the invocation of sheep imagery, particularly their herd-like, peaceful yet reactive to danger personas.
If I’m turning now to Yiddish, it could mean the well of comparables is beginning to finally run dry!
Examining interest rates (some things never change like my hyper focus on the Russell’s, Interest Rates and Oil), 135 was the TLT (30 Year Long Bond) Calendar Range high. If you recall, Monday night I wrote that if that area cleared on an intraday basis then failed by the close, most likely it meant the rally is running out of steam. Furthermore, I pointed out the SPDR Barclays Hi YieldBonds (JNK) closing just over its January Calendar Range high, which might suggest that the money that had poured into the US Bonds is now slowly moving into junk debt.
Looking at the indices, NASDAQ and the S&P 500 broke the 50 Daily Moving Averages and are back in unconfirmed warning phases. The Russell 2000sheld the 50 DMA and closed relatively well. None, have taken out the high or low of the January Calendar range. Clearly, that calendar range roadmap has become my “Waze” or North Star if you will.
S&P 500 (SPY) Unconfirmed Warning Phase 204.77 the 50 DMA. Support 201.05, 202.75 pivotal Subscribers: Negative pivots in all
Russell 2000 (IWM) Bullish 117.30 the 50 DMA to defend. January high 120.56 underlying support 115.30
Dow (DIA) Warning 176.79 the 50 DMA to get back above. Support at 173.20
Nasdaq (QQQ) Unconfirmed Warning Phase 103.33 the 50 DMA to defend. Support 100.93
NOTE: Most Etfs are still in their January Calendar Range
XLF (Financials) 23.77 now resistance to clear or could see 23.15
KRE (Regional Banks) Inside day therefore indecisive
SMH (Semiconductors) Unconfirmed warning phase
IYT (Transportation) Unconfirmed warning
IBB (Biotechnology) Over its Calendar Range still
XRT (Retail) Held well
IYR (Real Estate) Over Calendar Range and on highs
ITB (US Home Construction) Inside day under the 50 DMA
GLD (Gold Trust) As expected a rally with the gap higher. Well over its Calendar Range
GDX (Gold Miners) Unconfirmed Accumulation Phase
USO (US Oil Fund) Finding stability perhaps but need more proof
OIH (Oil Services) The 3 oil related sectors are all doing better and will wait to see if they can clear the 50 DMAs
TAN (Guggenheim Solar Energy) Now will look for a dip to buy against the 50 DMA
TBT (Ultrashort Lehman 20+ Year Treasuries) TLTs closed under 135 for a second day after piercing it intraday
UUP (Dollar Bull) 24.70 will be support if good with its possible island top
EWG (Germany): Inside day-interesting if clears 28.35
FXI (China Large Cap Fund) 42.75 now support to hold
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)
AAPL Over 114.77 good risk to around 112.25 the 50 DMA after the good earnings report
JWN If holds over 78.35 then like for a possible continuation to new highs miniswing trade
Category 4:N/A
Phase Change:
WTW Reports February 12th Slingshot low classic. Has to hold 17.30 and over 17.65 even better. Could see around 21.00
APC Reports February 2nd Like against 81.43 the 50 DMA and has to clear 85.21 to really look good
PWRD Still patiently waiting for this to clear 19.25 with the risk of the low of the day it does for a swing
AA Performed well today. Like the move over 16.11 with risk to 15.75 for a miniswing maybe swing
Shorts:
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
DTV ½ position. Will look for a 5 or 30 min OR failure to add to the position with risk over 85.50
Category 6: N/A
Best Best wishes for your trading,
Michele Schneider
