By all accounts a good digestion day. Financials continued to shine on the heels of strong earnings in that sector. Retail made new highs once again and transportation made up for some its lag from last week.Rates dropped, the dollar was unchanged and biotechnology took a breather. The big news for the next session is the inside day setup (when the range of the day is inside the range of the day prior). That often indicates a pause or some hesitation in the particular instrument that sets up with the inside day. It also often provides great low risk opportunities to follow the way the range breaks the following day.
S&P 500 (SPY)169.07 the May 22nd high next critical place to clear. With the gap last Thursday, that low has to hold for now
Russell 2000 (IWM) See no reasons for concern at this point unless the gap low from Thursday is violated
Dow (DIA)155.54 the May 22nd high to clear with last Thursday’s gap low the point to hold
NASDAQ 100 (QQQ) Other than some short-term high relative strength indicators, looks pretty good here
ETFs:
XLF (Financials)New 2013 highs making 20.35 a pivotal area and 20.70 next point of resistance.
SMH (Semiconductors) Lovely pause at the 2013 highs which I would not hesitate to follow up
XRT (Retail) Rested Friday, made new highs today
IYT (Transportation) Still not close to the 2013 highs, but over 115.33 clears recent congestion with 113 support
IBB (Biotechnology) after the huge run last Friday on double the average volume, today it made new highs and closed slightly lower. Still on watch for a reversal but that’s more to be ready for anything
IYR (Real Estate)Inside day.67.40 the 200 DMA and key support to hold. Like over 69.00
XHB (Homebuilders) Has to hold the 50 DMA or could see drop to the gap from 30.00
GLDAs long as 122.35 holds, an island bottom remains. Quiet session
USO (US Oil Fund)High oil prices are not want anyone wants to see, but technically, this made new 2013 highs
OIH (Oil Services) Has to clear 45.50 last Thursday’s high. Subscribers: A dip near 43.90 would be into the monthly moving average support
XOP (Oil and Gas Exploration) Weak close missing a second inside day by a tick. Like this better if can clear 61.82 Subscribers: Needs a monthly close over 61.00
TBT (Ultrashort Lehman 20+ Year Treasuries) Inside day. Held the daily chart support and fast moving average. 76 has been pivotal.
UUP (Dollar Bull) Subscribers: 22.55 a good point to clear for reentry long
EWG (Germany) Subscribers: close to pushing up over the 50 DMA
SGG (Sugar) Subscribers: Possible 2-day brick wall bottom pattern with max risk under Friday low
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: New and Old Subscribers: I do not include on the list 1. Anything with a weekly or daily RSI over 92 2. Anything within 4 days of reporting earnings 3. Anything with a risk over 1 ATR from its current close 4. Anything with only one day under the Floor Trader Pivots (unless specifically noted. 5. Anything with a potential slingshot or brick wall high (new 60 day high, close in the bottom 25% of the intraday range.
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:
CVLT Reports July 30th 2-day correction with the 10 DMA 79.05 max risk. Can see 88.14 the 2013 high if this gets moving
DDD Reports July 30th. Max risk 46.93 the 10 DMA. Over todays high could see 50.00-52.00
JPM 54.15 max risk and like to see it clear the pivots at 55 then today’s high and R1.
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)
CLR 90.86 is S1 and the 10 DMA for risk point. Then, if can get going, 95.00 next target
CME Reports August 1. Inside day and has to hold 76.05 and clear 77.45 with 80 next area of resistance
MGM Like to see 15.50 hold-and clear 16.00 for a much bigger move up longer term
MNST 60.32 the 10 DMA and good risk as this pushes up against a trendline that breaks out over todays high and R1
SKS Almost an inside day.14.50 a pivotal area. Through 14.75 see move to 15.55-16.00
Category 4: (Rip Tide) N/A
Phase Change:
CLH Inside day right on converging moving averages with R1 and today’s high lined up.
JCP 2 inside days. Right on the 50 DMA. Look for move over today’s high with risk to 17.06 the 10 DMA.
HOG Reports July 25th Inside day has to clear56.03 next hurdle and has to hold 54.77.
BIIB Reports July 25th. As long as it holds 222 area, back over 225 could see move up to 248 or better
Shorts:
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
POT Inside day. Short against the 200 DMA 40.69 and if can break 39.39 should get good follow through
EL Risk is to the 50 DMA 68.53 and could go back to the 200 DMA at 64.17
Category 6: N/A
Bye for Now!
