A Very Merry Un-Birthday
Thursday, July 16th was the kick off of the new 6-month Calendar Range. That means that the highs and lows from July 1st to July 15th are now the range to regard until next January.
Goodness, doesn’t that give you angst about how fast time flies?
What makes the current market particularly interesting is the increasing diversity not only among the four indices and various sectors and groups, but also among our reliable Economic Modern Family.
Not a member of the family, NASDAQ clearly had the most impressive un-birthday taking out the July and 2015 trading range. The big guns-Netflix, Amazon, Google are relaying huge corporate profits haven’t slowed down at all.
Why do I watch IWM, XRT, IYT, KRE, SMH and IBB a.k.a the Economic Modern Family?
Corporate profits are great for corporations and investors who hold shares in them (we own 2 of the 3 aforementioned.)
However, to keep a realistic sense of the US Economy, although rates, the dollar, commodity prices also impact the gauge, the Economic Modern Family gives us a reliable framework to assess how the smaller cap companies, goods moving across the country, consumer sentiment, and local banks (many urban and rural folks alike park their money and borrow from the local banks) are faring.
Semiconductors and Biotechnology are thrown into the family as both sectors are excellent measures of speculative sentiment. Add all 6 members together and the gestalt becomes more coherent.
The S&P 500, Dow and NASDAQ are above the July 6-month Calendar Range. Granddad Russell 2000 is not.
Grandma Retail (XRT) is the only sector of the family that took out the 6-month range. All the others (IBB, KRE, IYT, SMH) are either super close (IBB, KRE), within striking distance (IYT) or far away (SMH).
That scenario of only 1 member above the 6-month calendar range currently, certainly keeps any “bullish” complacency at bay. I will look for other members to join the NASDAQs rally sooner rather than late.
Otherwise, I will watch for signs that NASDAQ’s rally is waning.
“Statistics prove that you've
One birthday
One birthday every year
But there are 364 un birthdays
That is why we are all gathered here” Alice in Wonderland
S&P 500 (SPY) 211.28 the 6-month Calendar range high to defend Subscribers: Positive Pivots in all
Russell 2000 (IWM) 126.50 the high to clear on a closing basis
Dow (DIA) 180.72 the 6-month Calendar range high to defend
Nasdaq (QQQ) 110.81 the 6-month Calendar range high to defend
XLF (Financials) Had a runaway gap which means big banks getting richer too-25.37 keeps the gap intact
KRE (Regional Banks) 45.00 next resistance to clear on a closing basis with support at 43.98
SMH (Semiconductors) July range expanded. That means when one way or the other breaks, the follow through will be significant.
IYT (Transportation) Inside day, holding the reversal thus far. Has to clear 148.88 to look better
IBB (Biotechnology) Inside day near the highs
XRT (Retail) Came into the session long after writing this, “Has my vote as the best chance to play catchup to the Biotech and Financial Sectors.” 121.24 to defend now
IYR (Real Estate) Unconfirmed recovery phase
XHB (US HomeBuilders) 36.70 area support to hold
GLD (Gold Trust) Inside day on the lows.
SLV (Silver) Inverted hammer doji
TAN (Guggenheim Solar Energy) Backed from the resistance-now has an inside day
TLT (iShares 20+ Year Treasuries) Holding 2015 lows
UUP (Dollar Bull) Looks good
EEM (Emerging Markets) 39.00 pivotal
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
***Market Tone: Short-term Positive 4. Intermediate-Term Positive 8, and Long-Term Positive 9. NOTE: Market Tone is updated before the open each day and changes in real time throughout the day.
*All starred picks are from the automated list of picks (which now includes short picks!)
Category 1: 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:
*FEYE had a mean reversion signal at 47.74. Now, over today’s high using csts rules clears R1. Risk today’s low 47.56. Day to mini as reports July 30th
Category 3: (Double Up) Positive Phase, Condition 1 through 4, Positive Pivots which means can either buy an 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)
*QIHU Inside day. Max risk 60.43 and like over 63.40 but also if holds 61.34 the 10 DMA
*EXPE ORR bet now for mini against 108.50 reports 7/30.
*DRI Good for day to swing if clears 73.40 and risk can vary with max 71.67 Any OR
*RLGY Reports 7/31. Negative pivots but inside day so now, has to clear 48.63 and hold 47.92. Ideally like to see it above 48.26 Mini
Category 4: N/A
Phase Change:
AVGO Hasn’t crossed the 50 DMA yet but if it does, as an all-star has potential for a swing trade provided it holds the 50 DMA area
Reversal Trades: (Glass or Brick Wall Bottom or Top):
GLPI Reports 7/29 Reversal pattern and can risk to the lows of this move 34.67. 35.14 pivotal.
GT Reports July 28th Watch to hold 29.73 and clear overhead 50 DMA at 30.77
Shorts: On automated list to watch: OXY Under 72
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
*FLS Reports July 23rd. Inside day under the 10 DMA. Looks weak. Risk 50.45 for a day to min and has to break S1 since pivots are positive
*TEL Reports 7/21 Risk 63.40 R1 and under 63 will keep it beneath pivots for a day to mini Any OR
Category 6: N/A
Best Best wishes for your trading,
Michele Schneider
