Having deja vu all over again, the small caps or Russell 2000s travel to their own beat, breaking under the 50 DMA for an unconfirmed warning phase for the 4th time this year. Furthermore, that happened on better than average volume. As one of four indices, if we look in the complete opposite direction, the Dow closed on new highs!
The first time in January, while IWM broke down, the Dow followed eventually. In early April, a delay of a drawdown in DIA after IWM broke the 50 DMA happened as well, but not so in June, when the DIA held steady regardless. That leaves a few possible scenarios to speculate on presently.
Interest rates remain low while the US dollar firmed from its recent lows-this happened before as well. But firming is not the same as reversal of trend, which the US dollar has yet to do until it clears its 200 DMA. Therefore, that relationship should help clarify near term macro trends.
And finally, sector and group rotations-Energy, Semiconductors, Real Estate, which have all been leading this year-look spiffy again. Our longer term ETF portfolio fund has held steadfast in those 3 groups, in spite of soft corrections-surely that means something!
S&P 500 (SPY) 198.29 the highs to clear with 197 major support to hold Subscribers: Positive Pivots in all except IWM
Russell 2000 (IWM) Unconfirmed warning phase with the 200 DMA not so far if it can’t get back over the 50 DMA
Dow (DIA) New highs
Nasdaq (QQQ) New highs but a close that does make me a bit uneasy, especially if this breaks 95.70 and closes weak on Thursday
XLF (Financials) Inside day with 22.85 key support to hold
KRE (Regional Banks) Tomorrow earnings on tap include lots of regional banks-then we can see if this holds the major moving averages or not
SMH (Semiconductors) Doing what this group does-rocks on!
IYT (Transportation) New highs with target around 160
IBB (Biotechnology) The 50 DMA coming up at 245.09
XRT (Retail) close to support and if good should hold here
IYR (Real Estate) Overbought but loving the soft rates
ITB (US Home Construction) Got a boost from homebuilder confidence statistic. Now, has to prove it’s not a one day wonder
GLD Cannot really say much until this breaks the 50 and 200 DMAs
USO (US Oil Fund) Possible island bottom but not a new low if confirms Thursday
OIH (Oil Services) Looks much better
XLE (Energy) Back with a potential leadership position
TBT (Ultrashort Lehman 20+ Year Treasuries) 113.82 in TLTs is where we started this week looking
UUP (Dollar Bull) confirmed recovery phase-keep watching
FXI (China Large Cap Fund) New highs for 2014
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) 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:
SPWR Reports 7/31 Inside day under the 10 DMA-over 38.85 clears that and R1 risk is to under S2 37.44
AEM Reports 7/30 Inside day and like over 40.53 risk 39.60
PRU Reports 8/6. Has 3 shooting stars (candlestick pattern) which means over 91.25 a good follow for any timeframe with max risk 90.10
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)
CSC cleared away from the 50 DMA and closed in an improved condition-would trade it tight and have stop around 62.95. If good, should see move up to 64 and beyond
XOM Reports 7/31/ Like on an opening range reversal best to control risk. Looks like it could see 105 or better
INTU Over 82 looks good with risk to 81.10 or so, the 10 DMA-read lots of call buying here today. Potential for 10.00 move in a good market
GT Reports 7/30 27.64 support with R1 28.20 to clear
Category 4: (Rip Tide) N/A
Phase Change:
KORS Potential slingshot low if clears 82.52 with risk to S2 76.33 or about 2 ATRs
GLPI Reports 7/29 before open We have held on, now, over R1 35.21 could be a fun daytrade add
X Reports 7/29. Bounced off the 200 DMA into the 10 DMA resistance. Over 26.82 like with stop under 25.85
WMT 76.54 now risk and if good should clear 77.25
MRVL Reports August 21st. Confirmed brick wall low and now needs to clear the 200 DMA at 14.48
SFM Inside day on that support which means watch for move over 31.55 for possible add
Shorts: VMW Reports July 22 IACI 7/30
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
LNKD Reports 7/31 2 Inside days. Sitting on the 50 DMA with risk 162.74 and breaks 156.67
CRM Inside day with risk tight around 54.20-can see51.50 or lower
ALXN Reports 7/24. Never gave a signal but keep watching for resistance now 162.16
Category 6: White Cap-N/A
