The big news on Tuesday (which wound up living up to its turnaround status and not in a good way): Janet Yellen and her market commentary specifics about how overvalued Biotechnology Technology and Social Mediaare.
I’m no savant of everything a Fed Chairperson has ever said, yet it does seem highly unusual if not unprecedented that one would make such specific trade recommendations-well, as good as though she did.
The already vulnerable Russell 2000s stopped on the 116 dime and closed right around the 50 DMA. TheSemiconductors closed right around the pivotal point and the 20 Year Treasury Bonds defended the 50 DMA again.
Going back to my 3 recent focus groups: (and since not mentioned by Ms. Yellen, assume she’s cool with them), FXI (China), TAN (Solar) and (KRE) Regional Banks- China closed basically unchanged and in a strong position, Solars fell but now even closer to their underlying moving averages while Regional Banks fared well given initial good earnings results from the big banks with lots of the smaller banking institution’s earnings coming up this week.
The key now (actually always) is to make sure you are on right side of the phase and catch the inflection pointson instruments that give the cleanest risk vs reward (both long and short). Otherwise, some have called this year a widow maker. Our model portfolio, in its conservative fashion, remains well up for the year.
S&P 500 (SPY) 197 pivotal area and back over 198 area good Subscribers: Negative Pivots in all except DIA
Russell 2000 (IWM) If there is life left here, Tuesday’s lows have to hold and this must see at least a return over 115.75
Dow (DIA) Quite, doji day near highs-different universe than IWM
Nasdaq (QQQ) 95.00 pivotal
XLF (Financials) Seems poised to continue with more bank earnings coming up
KRE (Regional Banks) Over 40.30 clears the fast moving average
SMH (Semiconductors) Closed right on the pivotal area 50.55 with a good aftermarket boost from Intel
IYT (Transportation) New highs should take this to around 160
XRT (Retail) About as close to support as this can get and if good will hold here
ITB (US Home Construction) This is definitely going the wrong way for a bull market closing under the 200 DMA
GLD Cannot really say much until this breaks the 50 and 200 DMAs
TAN (Guggenheim Solar Energy) Subscribers: like it over 43.13
TBT (Ultrashort Lehman 20+ Year Treasuries) Could be time to look here again if the TLT break 112.37
UUP (Dollar Bull) Unconfirmed recovery phase
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) N/A
Category 2: (Pipeline) N/A
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)
SLCA Negative pivots but with a good close end of day and a fave coming into tomorrow if holds 55
SBUX Reports July 24th 78.50 max risk if this is to break out over sideways consolidation
Category 4: (Rip Tide) N/A
Phase Change:
TXT 37.92 max risk to see if this can have another attempt at the 50 DMA
WMT Inside day on the moving averages with low risk to under 76.20 R1 77.02
MRVL Reports August 21st. Brick wall bottom in place if confirms over 14.19
SFM Held 30.77 are three times> With that as a risk could be an add over 31.77
AXL Inside day so still very much in focus with 19.89 or so R1 to clear
Shorts: VMW Reports July 22
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
LNKD Reports 7/31 Inside day. Sitting on the 50 DMA with risk 162.74
ALXN Reports 7/24. 163.25 a conservative risk with potential to 155 or lower
COG Reports 7/24 34.50 max resistance with room to 32 or lower
Category 6: White Cap-N/A
