After the first 2 trading days of 2014 and with the start of the first full week of trading, earnings season, ending the coming week with a jobs report, I expect Monday’s direction to dictate the bias for the ensuing days. Then, we can look for a possible U-turn if the jobs report is a major surprise (well over or under 7.0%).
In other words, considering we began with a correction from the highs in all indices and 2 days of a negative short term bias, if Monday continues in that direction, follow-through is the most likely scenario.
Conversely, if the market holds its ground into Monday and the Dow in particular, (had an inside day on Friday) takes out 165, then expect attempts at a rally with a lot of sideways ahead of the earnings and unemployment stats.
Regardless, the calendar ranges which identify patterns and price levels that occur very frequently and give you a big edge in finding stocks that are ready to move in a predictable way, officially kicks in this month, which should be the dictating daddy of the direction over the next few months. Stay tuned.
S&P 500 (SPY) Inside day meaning the range of Friday is inside the trading range from Thursday. Note which way the range breaks Subscribers: Negative Pivots in this and QQQ. Positive in IWM DIA
Russell 2000 (IWM) Inside day here as well
Dow (DIA) 165 would be good to clear for market health. Otherwise, under 163.70 will expect more downward movement
Nasdaq (QQQ) 86.68 is a pivotal point initially for the open. Then, if this can sustain over 87.00 good, if not, expect to see the 50 DMA
XLF (Financials) The winner on Friday (new multi-year highs) with big movement in many bank stocks. We like when this leads, therefore, look here for a big clue as well
SMH (Semiconductors) Over Friday’s high would be a good recovery for this group. Otherwise, see the 50 DMA here
XRT (Retail) Inside day with a move over 88.00 good and most likely for the whole market
IYT (Transportation) Inside day pause after Thursday’s decline. If holds the low from Friday, also a positive sign
IBB (Biotechnology) Sideways consolidation and still possible to see 230-235 if holds 225
IYR (Real Estate) A messy chart but in its bear phase, vulnerable until it takes out the 50 DMA
XHB (Homebuilders) 33.38 is the high to clear which looks good if can pull it off.
GLD 121 is the next area of resistance-that will test this latest luster
USO (US Oil Fund) 33.45 should provide support near-term but the chart is a bit broken
OIH (Oil Services) Inside day and remains vulnerable to the 200 DMA
XLE (Energy) Testing the 50 DMA-Monday should surely be decisive here
XOP (Oil and Gas Exploration) Weekly and monthly chart ok so needs to clear the 50 DMA on the daily
TBT (Ultrashort Lehman 20+ Year Treasuries) Assume over Friday’s high will bring more firmness with 80.00 the big kahuna to close above
UUP (Dollar Bull) Confirms recovery phase
IFN (India Fund) Subscribers: A weekly close over 20.00 will be a signal to go in
CORN (Corn) Subscribers: Slingshot low if confirms by clearing 31.00
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: (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:
CBST If holds Friday low and clears R1 68.48 like this for a run to the recent highs or around 72.00
Category 2: (Pipeline) N/A
Category 3: (Double Up) Positive Phase, Condition 1 through 4, Positive Pivots which means can eitherbuy 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)
HSP Consolidating-a fave pick for Monday if clears 41.35 with risk 40.85 area
FITB Like this sideways consolidation with an overhead target now of 23.50. Risk is 20.83 if has an OR high breakout Monday
MAS Made new highs quietly so risk now a bit of an issue-look for an ORR against S1
MET Over 54.05 like with tight risk to Friday’s low and the 10 DMA for a move to around 60.00
SFY Missed first leg before the break, but now, returned to the bull phase if holds Friday low. Over R1 or 13.76 like for a new swing trade. If can close the week over the 65 week moving average-13.92, first time since 2012
JPM If holds 58.00 area, then look for continuation but thinking more day to miniswing here
PANW Good action on Friday. 56.35 good support area for an ORR but also like a breakout over the highs 57.86 for a mini to hybrid swing
YOKU 31.00 good support. Still a candidate for new highs-all a matter of how the risk lines up
Category 4: (Rip Tide) N/A
Phase Change:
JCP returned to the 50 DMA which makes the risk super tight 8.57. Over R1 and Friday’s high a good area to clear for possible move back up to 10.50 and beyond
VNO Phase change to bullish if Friday low holds. 89.15 tighter risk with a move over 90.00 a good reason to think higher for swing
Shorts:
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
NSM Under 35.90 makes new lows and not oversold
QIHU Friday high good risk. Overall, see this dropping to the 200 DMA
RIG We covered the short but if breaks the 10 DMA or around 48.20 could see more downside
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 lows
CLDX Under S1 see more weakness with risk to 24.54 the 50 DMA
Bye For Now!
