The warning phase is accelerating, but going short now that the McLellan Oscillator is approaching oversold, looks better in theory since one blip up can bring in buyers for a bounce into overhead resistance.
Concerning sectors and groups, some had already given the signal to go short when the indices were making new highs, such as Retail and Oil Services. Others signaled warning earlier this week like Financials and Semiconductors.
We have turned to certain soft commodities and sectors that were beat up coming into this year and now are bottoming out.
Otherwise, we are happy with the almighty greenback even if the rates are basically zero. Zero sounds better than minus zero-which by the way, describes a lot of the country’s outside temperatures right now.
Not here in sunny New Mexico; but then again, this side of the US has no water-oh what fun! The Year of the Wooden Horse is turning more like Petrified Wood in these parts.
S&P 500 (SPY) Found some support from the 12/18 low I wrote about earlier this week. A bounce could be sellable, but right here the risk/reward for shorts is funky Subscribers: Negative pivots in all
Russell 2000 (IWM) Held Monday’s low so far. And now with 3 Distribution days in volume which clearly confirms caution
Dow (DIA) Marginally held the 12/18 low
Nasdaq (QQQ) Oversold on the near term relative strength. Have GOOG reporting tomorrow after the close
XLF (Financials) Holding 21.00-best I can say
SMH (Semiconductors) Holding 41.00-best I can say here
IYT (Transportation) Back to an unconfirmed warning phase
IBB (Biotechnology) Hanging onto the bull phase
XRT (Retail) Under the 200 DMA for a distribution phase
IYR (Real Estate) Over 64.70 will start to like this again
XHB (Homebuilders) Inside day-now that’s interesting
GLD Looks good closing out near the highs
USO (US Oil Fund) Looks like its bottoming
OIH (Oil Services) Oversold
XLE (Energy) Holding the 200 DMA
TBT (Ultrashort Lehman 20+ Year Treasuries) TLTs flirting with the 200 DMA
UUP (Dollar Bull) Holding pretty tough all things considered
CORN (Corn) Subscribers: One more push will clear the 50 DMA
BAL (Cotton) Subscribers: Unconfirmed an accumulation phase
JO (Coffee) Subscribers: Nice move up today
FCG (First Trust ISE Reserve NatGas) Not following UNG
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
NOTE: If you read Van Tharpe, the guru on position sizing and trading mastery, all profitable systems will lose money at times. At that point, the strategy is to reduce position size and stick true to the plan, and not push. Hismarble game highlights “streaks” and how to manage the good with the not so good. Small losses and flat equity curves are meaningless in a tough environment and do not reflect anything more than the normal cycle of any system. The equity curve is the most important aspect.
Category 1: (Aloha) Positive Phase, Condition 1, 2 days under the FTPs, Risk to Previous Day low, Can buy ½ over FTP and ½ over R1, Target- Day to at least 3 ATRs from entry:
HSP Reports February 12th. Like this one for tomorrow over R1 with risk to today’s low for a miniswing
Category 2: (Pipeline) Positive Phase, Condition 2-3, 2 days under the FTPs, Risk to Previous day low, Can buy ½ over FTP and ½ over R1, Target- Day to at least 3 ATRs from entry:
TXT Already reported. If holds, could be a good one to go to over R1
BHI R1 has to clear but still like this one too
Category 3: (Double Up) Positive Phase, Condition 1 through 4, Positive Pivots which means can either buy a 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)
FB reported and a gap over 57.10 is a breakaway gap-watching TWTR too for a daytrade since reportsFebruary 5th
NEE Inside day already reported. Like of holds the 10 DMA at 88.00 and clears 90.00
CCUR Waited for this to clear 8.50, now if it does like the buy and hold
AMBA Positive pivots here with the low of today the best risk and over 31.51
Category 4: (Rip Tide)N/A
Phase Change:
LGF Reports February 6th Inside day back under the 200 DMA but still a contender
KBH Closed right under the 200 DMA which now looks penetrable
CHK Reports February 20th. 27.04 now should be support
CREE Reported. Over the 200 DMA still a contender as well-and 63.06 is the 10 DMA
Shorts:
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
COST Back down where we covered. Now, under 111.92 could start a new leg down
EBAY 52.50 now resistance
Bye For Now!
