My favorite sector has been semiconductors for nearly 3 years now. I haven’t been shy about it. In fact, I have been quite vocal (in written and tweet form) and my loyal readers can testify to that.
Why do I mention it now? Because, the performance on Thursday was a technical dream. First, the low was 49.64 with the July calendar low 49.65-darn near picture perfect for finding support.
Secondly, because I wrote about the brick wall high earlier this week that would be negated if it cleared (intraday counts too) 50.53, which it did.
Third, it held the runaway gap on from July 1st, the same day it made the calendar range low. And finally, because it cleared the 10 DMA closing above it.
What has to happen now? Semiconductors must defend 50.53 to end the week and close above.
My other “tells” of equal interest. Interest rates-TLTs could not clear key resistance and although still above the 50 DMA, the decline end of day still puts their future at risk-especially with talk of a possible Fed Funds rate rise down the road.
The Russell 2000s held the 50 DMA, tested 116 and retreated but still closed weakest percentage wise. Therefore, Friday should be relatively decisive concerning this down move. If, TLTs fail, SMHs hold andIWM crosses 116-summer love prevails!
S&P 500 (SPY) Over 197.11 clears a lot of congestion. A weekly hold over 196.13 also good Subscribers:Negative Pivots in all
Russell 2000 (IWM) Held the 50 DMA, filled the gap to 116.05-there’s your range to watch
Dow (DIA) Over today’s high or around 169 looks good. Otherwise, 168.23 is good support to hold
Nasdaq (QQQ) 94.45 pivotal, over 95.26 good, under 94.20 defensive
XLF (Financials) Tested and held the 50 DMA
KRE (Regional Banks) 39.11 is the key support
IYT (Transportation) 147.25 pivotal
IYR (Real Estate) Had a good day with the low rates
GLD Gapped higher so will see if this is breakaway or not
USO (US Oil Fund) If holds 37.90 that is better longer term
TAN (Guggenheim Solar Energy) Held the major moving averages. Makes this still a contender
TBT (Ultrashort Lehman 20+ Year Treasuries) TLT 112.60 first area to defend-then the 50 DMA. Flipside, 113.82 to clear
EEM (Emerging Markets) Still worth watching
FXI (China Large Cap Fund) 37.95 is now a good point for entry
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:
ATI Risk is 45.15 and over R1 45.99 clears todays high but will still have some overhead
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:
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)
EW Hesitated on this one but now, looks ready to rocket to new highs for a new miniswing trade-risk 87.20
XRX Slightly negative pivots and inside day so keeping it here with risk 12.23 and like over 12.50
GT Slightly negative pivots but still over the 10 DMA so like if holds 27.56 ad clear 27.98 R1
VZ cleared 3 moving averages today therefore worth watching. 49 good support for an ORR and over 50 for a breakout
Category 4: (Rip Tide) Oversold (2 or more days under FTP), Condition 4, Needs to clear R1, Risk previous day low unless noted differently, Target- Day to at least 3 ATRs from entry:
Phase Change:
AMZN Reports July 24th. Long today for a swing until it proves right or wrong-risk around 320
VMW 92.41 is the 200 DMA to hold and R1 is 96.86 to clear
X Interesting hammer candle on the 10 DMA so watch this over today’s highs
STT 68.21 is R1 to keep this on watch
GLPI Will risk under S2 again
NUS lots of call buying and a potential slingshot low on good volume with R1 71.90
Shorts:
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
KORS Resistance 90.13 still looks like it wants to go to 86.75 or lower
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 low
DOW Phase change risk to 51.48 with S1 50.66 to break of an OR high failure under R1 and pivots
