Staying with the The Glass Half Full/Half Empty cliché, the abundance crowd clearly won the battle but have they won the war?
We have reasons to be cheerful:
1. All indices back in unconfirmed bullish phases. S&P 500 and the Dow in particular, cleared the fast moving averages although have more resistance hence the battle not the war comment.
2. Financials back in unconfirmed bullish phase with the 3 top groups (Semis, Real Estate Trust and Healthcare/Biotech) strong like bull.
3. The interest rates firmed abating fear that the economy can only sustain with very low rates.
4. Oil maybe reaching the end of its bottomless pit with price stabilization now not such a bad thing.
5. Retail is on all-time highs.
We have reasons to be fearful:
1. Nasdaq closed above the 50 DMA marginally and with a declining slope on the fast moving average, a reversal and topping pattern from late 2014 and continuing pressure in other big names there: Google, Amazon, Netflix
2. AAPL (Apple) grazed the 50 DMA but failed to close above it.
3. The small caps (IWM) had a good day, but could not clear the fast moving average and still some distance from its topping candle from December 31st.
4. Rates may have firmed but only in a sort of quiet, orderly fashion and not with nearly the same volume we saw in long bonds on the way up.
5. China (close to closing on new multi-year weekly highs) is strong, which could steal some thunder from the US economy-note though-the US Dollar is strong which helps both countries.
One could say I have manipulated the 5 items on the half full, half empty scenario to keep perfectly balanced between the bull/bear case. Guilty as charged!
Until we get through a powerful calendar range in the SPY or 10 full trading days into the new year and see the range established; then once the range breaks one way or another, assess and follow the next intermediate direction, I hear noise. Okay, soothing noise like ocean waves, but noise nonetheless.
S&P 500 (SPY) 204 has to hold and over 205.50support even better then, 207 next area Subscribers: Positive pivots in all
Russell 2000 (IWM) 117 has to hold and 118.78 a pivotal chart point from mid-December has to clear
Dow (DIA) 176.36 has to hold and 180 has to clear
Nasdaq (QQQ) Dancing on the key pivot area of 103.10-.20
XLF (Financials) Better but needs to clear 24.70
KRE (Regional Banks) 39.25 key area to clear and now, 38.70 key to hold
SMH (Semiconductors) 54.38 is the 10 DMA to clear and has to hold Thursday low
IYT (Transportation) Still underneath the 50 DMA- weakness
IBB (Biotechnology) Not quite to the highs yet, but certainly a leading group
XRT (Retail) New high close
IYR (Real Estate) New highs again
ITB (US Home Construction) Closed over 26.00 if sustains is very positive
GLD (Gold Trust) 117 now an area to clear and under 114.65 trouble
USO (US Oil Fund) Another day of good volume and no real price change to note that means bottom yet-keep watching
XLE (Energy) Best shot of moving up in the oil, energy and gas group
TBT (Ultrashort Lehman 20+ Year Treasuries) TLTs started showing confirmation of a possible blow off top and now have to see 130 remain resistance and a drop and failure of 128
EEM (Emerging Markets) Possible bottoming action
FXI (China Large Cap Fund) CLOSED over 42.00 and reason to think much higher in store this year
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)
AXL 23.00 is pivotal and like this for a mini or swing if clears with risk to around 22.60
BKD gapped over the 10 DMA which now 36.50 has to hold and clear 37.00
LNKD If today’s low holds, having a V bottom from 2014 with a move over 229.29 clearing the 10 DMA-mini to swing
PNRA 173.00 support and still think we can get into this even over 175 for a miniswing
V Condition improvement and with a good risk now to today’s low a candidate for a day to swing trade-as to eventually clear 270
HUM ORR good but also a move over 150 strong for a miniswing risk
PANW 123.83 risk and over 127.18 has to clear for a mini to swing
Category 4:N/A
Phase Change:
DDD Of course we are waiting for the 50 DMA but that could be any day now
FEYE If holds 32.00 on an ORR good otherwise has to clear 34.00 but long term friendly
BYD like an ORR against the 10 DMA 12.42 or needs to take out 13.06 again
BZH 18.75 now major support to hold and like over 19.50
HUN 22.96 cleared and now can look at a possible swing with a wide stop
EMC if holds 29.00 then we could be seeing a move to 30.00 and beyond
COH Unconfirmed phase change to accumulation. Has to hold todays low and lots of room
Shorts:
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
GEL 43.35 good resistance with a move under S1 41.53 good short point
DTV 86.44 is the resistance. Now has to break todays low for a swing short
CBS If cannot clear 53.74 then we can short under S1 53.41 for a swing
Category 6:N/A
Best Best wishes for your trading,
Michele Schneider
