“The 3rd time the SPY sees the 50 DMA won’t be a charm theory” What I have been tweeting and writing about, came to fruition big time with the gap lower and nary a bounce intraday with the eventual close as the biggest one day drop since November 2011. The small caps, Russell 2000, were the holdouts until late in the day, also closing under the 50 DMA. All indexes are now in a unconfirmed warning phase. Rates and the dollar continued to rise. Gold dropped like a stone under long term support and everything else followed in kind. Remember the mention of the real estate stocks as good shorts? Anyone check out Boston Properties or Lennar? BXP dropped 6.45% and LEN dropped 7.69%. Not that I’m so happy about the accurate assessment mind you. A market in decline might excite the perma bears, but I am always rooting for the bulls. However, we are smart enough to read the market conditions. Hopefully, these daily comments have helped you as well.
S&P 500 (SPY)Unconfirmed warning phase and still a relatively weak one going by the slope of the 50 DMA. But, except for the possibility of an end of week bounce, lots of damage done
Russell 2000 (IWM) Unconfirmed warning phase and still a relatively weak one going by the slope of the 50 DMA. Yet, it still remains the best one of the bunch relative to the price and the 50 DMA
Dow (DIA) 146 could be some support and only a move over 149.20 or so would be mildly encouraging
NASDAQ 100 (QQQ)In line with all the others, weak warning phase, lots of damage done-will need some work before considering anything more than a daytrade long.
ETFs:
GLDI warned you! It never gave anyone a chance to see 130 defended. Now, 115 is a target but with very oversold conditions, a bounce is not out of the question-maybe even to 130
XLF (Financials)After taking out a substantial monthly reversal off the lows, today it closed beneath. Will see what happens around these levels.
IBB (Biotechnology) Vulnerable? Looks like it will go the way of real estate-visiting the 200 DMA next if can’t hold here
SMH (Semiconductors) The mighty fall alright! 36.97 May low-like to see it defended, especially since Intel (INTC) remains in a bullish phase, however marginally.
XRT (Retail) As one of the stronger sectors, this held the 50 DMA-first place to look for a possible bounce, but not ready to call it a long-term one just yet
IYT (Transportation) Held June lows 109.25. Another group that could be the better place to look for a bounce
IYR (Real Estate) Wrote Wednesday night: “This is the sector to find shorts if the market continues its drop tomorrow.” Man, true that!
USO (US Oil Fund)Dropped to the moving averages-that is interesting except for one thing-the island top that was left
OIH (Oil Services)Held June low, but less interesting for a new long now
XLE (Energy) 78.00 might offer some support
TBT (Ultrashort Lehman 20+ Year Treasuries) Bond bubble is here, but now, kinda late to the party
UUP (Dollar Bull) Gapped over the 200 DMA today and changed phase warning. Should hold the 200 now
SGG (Sugar) Subscribers: If this has any chance of holding a possible bottom 16.35 today’s low is the number to hold.
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:
SPLK held the 50 DMA 43.44. Closed pretty good. But, let’s be classic about it and only get long if clears R1. Then use either today’s low or the 50 DMA for risk
GCI Inside day. I am long a very small position based on its holding Wednesday low and the gap up. And, if this can clear R1 24.50 might add.
PNC Using S1 as a risk and if clears R1, which also matches today’s high, still a contender
PRU Using a tight stop, this has a shot if can clear 72.00 again, then the recent highs
LTD Held the 50 and closed on the 10 DMA. If 50.97 can hold, look at today’s high and R1
SRPT Only one day under pivots, but holding 10 DMA with clear risk S1. Like over 1 with the negative pivots
Category 2: (Pipeline) N/A
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)
GME Look for an Opening Range Reversal against 40.50
Category 4: (Rip Tide) Oversold (2 or more days under FTP), Condition 4, Needs to clear R1, Risk previous day low unless noted differently, Target- Day to at least 3 ATRs from entry:
MBI I like that it challenged but held the 50 DMA. Again, R1 is critical which comes in at 13.26- I will not hesitate to buy it over that if confirms
Phase Change:
RDC holding 3 moving averages and the 80 monthly. Over R1 lines up well with risk to under today's low
Shorts: May have to wait for some white cap patterns now
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
CNQ Should already be short, and now looking to see what happens under 28.17
HTZ unconfirmed warning phase but has to break 24.00 and S1 more for day to mini
CHRW Opening Range High Failure only
POT Opening Range High Failure only
MON today was the day but, if it has an OR high failure, could still be a contender longer term
Category 6:N/A
Bye for Now!
