Welcome to the New Year and the classic cycle of active traders’ portfolios during every market correction:
1. Last gasp new longs for daytrades, out same day with small loss (last week).
2. Weaker longs from right before (up to 3 days) correction, either exit with a smaller profit or lose the percentage allocated for swing losses (we go with around ½% of overall equity). (Last week and Monday January 5th) Also, the portfolio now outperforms the S&P 500.
3. Do not look to buy anything new after experiencing step one and two. (After the daytrade loss)
4. Simultaneously with step one and two, go short (last week)-helps the P&L.
5. After the correction wanes, the picks that have held up in a positive phase or condition, look to buy with tightest risk. Also look for strong reversal patterns. (TBD)
If you are an active trader and not experiencing this portfolio life cycle, probably means:
1. You are a buy and hold long-term investor and not an “active” trader.
2. You are in all cash-not active at all.
3. You are stubborn and don’t know how to position trade or control risk without emotions and ego.
4. You either cannot go short because of account restrictions or maybe because you just don’t like going short.
5. You are as rich as Warren Buffett/Carl Icahn/George Soros and so you are not even watching the screen (therefore you are not reading my daily either)
See below for market commentary and analysis:
S&P 500 (SPY) 204 is the 50 DMA that it broke down from and 200 is the major support-unconfirmed phase change to weak warning. Subscribers: Negative pivots in all
Russell 2000 (IWM) The surprising holdout of the 50 DMA hence the bullish phase. 116.68 is the 50 DMA and over 118.78 the point to clear
Dow (DIA) The 50 DMA is 175.84 now resistance and support at 172.30
Nasdaq (QQQ) 100.45 next support and 103 is the 50 DMA to clear
XLF (Financials) unconfirmed phase change to weak warning
KRE (Regional Banks) Dropped EXACTLY to my point 39.15-so what it does from here is really important.
SMH (Semiconductors) A strength in that it is holding the 50 DMA 53.43 and over 54.10 would be relief
IBB (Biotechnology) 300-310 the range to watch for a break either way
IYR (Real Estate) 77.75 pivotal as long as that area holds. But 79 is good resistance
ITB (US Home Construction) 25.05 the 50 DMA and another place to look for longs if market holds
GLD (Gold Trust) Gapped over the 50 DMA but overall, a bit sloppy of a chart
GDX (Gold Miners) Confirmed recovery phase with 20.00 good resistance to clear
USO (US Oil Fund) Even more ridiculously oversold but not registering yet with low ball buyers-unless it gaps up over 19.40 on Tuesday- we will take notice
TAN (Guggenheim Solar Energy) Subscribers: That 50 DMA is what I am waiting for
TBT (Ultrashort Lehman 20+ Year Treasuries) TLTs overbought big volume so blow off happening??
UUP (Dollar Bull) Runaway gap confirmed unless it breaks 24.00
FXI (China Large Cap Fund) Over 42.00 on a closing basis game changer
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:
**NOTE: The focus on 2015 picks primarily
EBAY Has to take out 56.25 and hold 54.70 the 50 DMA level for a swing
IGT 16.82 good risk if clears 17.27 R1-swing
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:
WMT Like this over 86.27 risk somewhere around 85 for swing
PNRA If this holds 171.85 area, like this a lot longer term for a move if clears today’s highs
PAY 36.29 is the 50 DMA and max risk and like this over R1 37.27 for swing
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 Keeping this here for a perhaps ORR entry swing
Category 4: N/A
Phase Change:
CIEN Over 19.64 with risk to under 19.09 good shot for swing
BZH 18.75 risk with over 19.43 R1 a good entry for swing
CCUR 7.02 a good risk and over 7.26 a good entry point for a swing
ONVO 7.13 is pivotal the 10 DMA-like risk under 7.02
GM Touched down on the 200 DMA after reporting early today. A good risk is 33.79 and like if clears pivots 34.56 and then R1 35.00
Shorts:
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
GEL Inside day 43.88 good close resistance. Under 42.37 can see 40 then 37 then maybe lower for swing
GPOR Probably best to look for an ORR against 42.13 for a miniswing
DTV Unconfirmed phase change to warning if cannot clear 86.05. Can see 79 next big support
NFLX Probably best to look for an ORR against 340
ABBV Unconfirmed phase change to warning if cannot clear 66.55 and breaks 64.00
Category 6:N/A
Best Best wishes for your trading,
Michele Schneider
