In Monday night’s daily, I wrote about Biotechnology and how we were on watch for the possibility of akey reversal day after Friday’s double the average blow off rally. Tuesday, a classic second indication of possible reversal in play occurred once again in the Biotechnology ETFs. It opened on new all-time highs and closed on the intraday lows as well as below Monday’s low of the day price. In the Russell 2000s, there was a similar scenario setup only with a couple of differences. IWM matched but did not take out the all-time high made Monday right on the Tuesday’s open and then closed on the intraday lows, but not below Monday’s low. The S&P 500 hasn’t traded near enough to the May 22nd high, leaving that top in place. Therefore, Wednesday’s action should prove to be more decisive for next short-term direction. No doubt the market remains in a bull phase. As with all technical indicators, we will look for the necessary confirmation.
S&P 500 (SPY)169.07 the May 22nd high is critical to clear or that topping action remains intact with Tuesday’s action reasons to think this can go back to around 165 fairly quickly.
Russell 2000 (IWM) I’ll give this a bit more leeway after today’s possible reversal-Thursday’s gap low 102.59. If that breaks, expect 100 pretty quickly. Then we’ll take another pulse.
Dow (DIA)155.54 the May 22nd high looms above with last Thursday’s low 153.71 close.
NASDAQ 100 (QQQ) This made a new all-time high but did not close on the intraday lows. So, not great, but not nearly as ominous unless it gaps open lower or takes out today’s low and remains weak Wednesday
ETFs:
XLF (Financials)Held 20.35 a pivotal number as the old 2013 high-so for now, more like digestion than reversal if I had to take a guess.
SMH (Semiconductors) Semiconductors on the other hand, made a new 2013 high making 39.29 the new pivotal number to hold.
XRT (Retail) This too has a possible reversal candle now that it made a new all-time high and closed within 25% of the intraday low
IYT (Transportation) Left a bearish engulfing pattern in a group that was not close to matching the 2013 high from May
IBB (Biotechnology) As per above, tomorrow should be decisive one way or another for the short-term anyway
IYR (Real Estate)Floating, literally-last 4 trading days- above the 200 and below the 50 DMA
XHB (Homebuilders) Broke the 50 DMA (unconfirmed warning phase) so could see that drop to the gap from 30.00
GLDAs long as 122.35 holds, an island bottom remains. Now, over 125, could see more upside
USO (US Oil Fund)Yet another possible reversal day-new highs, close on the lows
OIH (Oil Services) Subscribers: A dip near 43.90 area would be into the monthly moving average support
XLE (Energy) Tested the 50 DMA today
XOP (Oil and Gas Exploration) Subscribers: Needs a monthly close over 61.00
TBT (Ultrashort Lehman 20+ Year Treasuries) Subscribers: Let’s follow the Category 2 rules-has to clear pivots and R1
EWG (Germany) Subscribers: pushing up into the 50 DMA-a good place to clear for phase change
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:
DDD Reports July 30th. 46.12 the 50 DMA to hold as max risk. A 3-day pattern meaning has to clear the pivots, then R1
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:
TPX Reports July 25th As long as it holds the 50 DMA 44.37, over today’s high could see 50.00 or so
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)
JPM Inside day. 54.40 max risk. R1 and today’s high are a good lineup to take out.
RCL Reports July 25th. Good comeback on close. Over 36 should take this to 38-39 or higher. Risk around 35.50
CLR Slightly negative pivots but held S1 and now needs to clear 93.26 R1
MGM Like to see 15.50 hold-and clear 16.00 for a much bigger move up longer term
CB Reports July 25th. 2 inside days. Has to hold today’s low and clear today’s high. Target 90 or so
MNST 60.30 the 10 DMA and good risk as this pushes up against a trendline that breaks out over todays high and R1
Category 4: (Rip Tide) N/A
Phase Change:
CLH Long ½ position for the portfolio as long as it holds 54.50 level. If clears today’s high would look to add
HOG Reports July 25th on the cusp as it is hovering on the 50 DMA. Today’s high and R1 line up and that would clear the 50 DMA as well.
BIIB Reports July 25th. Held onto the 50 DMA and previous day lows. Now, has to take out R1
Shorts:
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
POT Got P1 and P2 today. Now, 38.90 should be resistance for this to keep going south
APA Reports August 1st. Today’s high max risk. Under the 50 DMA and looking like it could see the 200 DMA or lower
CTRX Reports August 1st. 50.00 good point of resistance with 48.37 the 10 DMA to break
EL Risk is to 67.50 and could go back to the 200 DMA at 64.17
Category 6: N/A
Bye for Now!
