Meanwhile, In A Parallel Universe…
Last 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.
The week ended with increasing diversity among the four indices, various sectors and groups, and most strikingly to me, among the Economic Modern Family.
Although NASDAQ traded in a parallel universe (had a runaway gap on Friday), what I suspected might happen seemingly did happen. The big corporate profits in Google and Neflix juiced Apple. Amazon and Facebook hence thrilling shareholders, but had virtually no impact on the “meat and potatoes” of what drives the US Economy.
At the risk of sounding like a nagging mom, the members of the Economic Modern Family-IWM, XRT, IYT, KRE, SMH and IBB-are members because they continue to offer the most succinct way for us to gauge the true US Economy.
The Economic Modern Family measures the performance of smaller cap companies, goods moving across the country, consumer sentiment, and local banks. (IWM, IYT, XRT, KRE)
Semiconductors and Biotechnology are in the mix as both sectors are excellent assessors of speculative interest.
If we use the 6-month calendar range as yet another layer, only Biotechnology in the Family closed above that range in spite of NASDAQ’s performance last week.Biotechnology has been awesome, but like the larger cap corporations, does little to help the US mainstream economy.
Incidentally, the S&P 500 also did its best to hold up the fort.
Throughout the 2015 market ups and downs, in addition to our Complete Swing Trading System rules, there are a couple of other principles that factor into our swing trading decisions.
Besides referring to the Economic Modern Family’s interrelationships, the Chinese astrological 2015 Year of the Sheep or large perimeters of the trading range yielding a counterintuitive bent-sell at the highs, buy at the lows, has helped.
Secondly, I confirm the validity of that bent if relative strength indicators (overbought/oversold) and volume patterns (blow off tops/bottoms) support it.
Furthermore, before this earnings season had begun to wow us, the yearlong breakout of the Russell 2000s from 2014 over 120 reminded me to step back and look at the bigger picture.
With that said, I do believe we have enough to look at and think about without the complications of what the Fed might do, where Greece and China wind up and so forth.
Will the extraterrestrial QQQs hold? Will SPY break the 2015 Trading Range highs? Where will investors that are booking big profits in the NASDAQ and Biotechnologyleaders park their money next?
Does that mean IWM will catch up? If QQQs and/or SPYs falter, what might we anticipate for the rest of our other already lagging family?
S&P 500 (SPY) Positive that the gap up last Thursday was not only defended Friday, but saw a bit of higher close. Subscribers: Positive Pivots in SPY QQQ Negative IWM DIA
Russell 2000 (IWM) For now, considering Friday’s weak action noise unless it breaks under 124.50
Dow (DIA) Like IWM, noise here last Friday until it breaks 179.60
Nasdaq (QQQ) Runaway gap. Over 112 keeps it
XLF (Financials) No more runaway gap but still a solid close for the week
KRE (Regional Banks) 45.00 next resistance to clear on a closing basis with support at 43.98
SMH (Semiconductors) Inside day. If semis can gain traction the market could get more wholly exciting. 54.60 is the 200 DMA where excitement awaits
IYT (Transportation) Good close to week with the overhead 50 DMA resistance
IBB (Biotechnology) We do love when big bro gets his B-12 shot
XRT (Retail) Granny can use some of that B-12. 100 pivotal. Over 102.50 it’s golden
IYR (Real Estate) One of the ugliest confirmations of a recovery phase
XHB (US HomeBuilders) Disappointing action but did hold the 50 DMA
GLD (Gold Trust) Huge volume on the move lower and oversold. Blow off possible but no signs of it yet
SLV (Silver) Holding 14.02
GDX (Gold Miners) RIDICULOUSLY oversold and on new all-time lows
USO (US Oil Fund) Aside but always watching for signs of life
UNG (US NatGas Fund) Most interesting with a good end of week comeback-worth watching over 14.05
TLT (iShares 20+ Year Treasuries) Unconfirmed phase change to recovery
UUP (Dollar Bull) In the sea of interesting relationships, there is also a strong dollar
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 2. Intermediate-Term Positive 5, andLong-Term Positive 8. 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:
*CYH Reports August 3rd Miniswing for risk purposes to Friday’s low 59.99. Then, has to clear 60.62 the pivots then 61.25 R1
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)
JAZZ Reports August 4th. Risk 179 and with an inside day has to clear 184.00 Any OR
*PBF Has negative pivots but with 2 Inside days best place to write about this is Cat 3. Reports July 30th. Day to mini once it clears 31.45 and holds 30.90
GERN Reports August 3rd. Shouldn’t break under 4.00 and over 4.30ish has potential to go much higher
*FEYE had a mean reversion signal at 47.74. Risk today’s low 47.82. Any OR Day to mini as reports July 30th
*DRI Inside day. Good for day to swing if clears 73.40 and risk can vary with max 71.68 Any OR
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):
GT Reports July 28th Watch to hold 29.75 and clear overhead 50 DMA at 30.77
Z Reports August 4th Confirmed a bottom. Now, with positive pivots can look at it holding around 83.30 and risk to 82.00. Mini to swing
Shorts:
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
*BBBY Never liked this store much. Reports September 24th. Think online shopping will put this store under. Risk 69.00 Any OR
Category 6: White Cap-Having a 2-3 Day correction over the pivots. In a Negative Phase, Positive Pivots. Can sell an Opening Range High Failure if happens below R1 or previous day high whatever is higher and/or weakness if breaks S1 and prior day’s low
*FAST inside day with good risk to 42.10. See a move down to 40.00 and perhaps lower. Day to Swing. Has to break S1
Best Best wishes for your trading,
Michele Schneider
