The Weigh-Eigh-Ting Is The Hardest Part
Commentary devoted to Tom Petty and The Heartbreakers
NASDAQ followed through from its runaway gap to new 2015 highs. Biotechnology cleared the 6-month calendar range forging to new all-time highs.
Simultaneously during Monday’s session, there were 287 stocks down 4% or more on the day in the Russell 2000s (IWM). The Bloomberg Commodity Index fell to its lowest level since 2002.
Thanks to two of our automated trading systems-one that weights and buys the top NASDAQ performers and the other than uses a Mean Reversion system to go both long and short, we’ve handsomely profited from the recent orbital gainers.
Yet, I continue to worry regardless. After all, I also look after my Modern Family with Shepherdess devotion. Like a Dickensian tale, the Family measures the “heart” of the economy and not just corporate profits.
NASDAQ may be singing, Oh baby don't it feel like heaven right now”, but my Modern Family (IWM, IYT, XRT, KRE, IBB, SMH) borrowing again from Tom Petty’s songbook, is humming, “It's a long day, living in Reseda. There's a freeway running through the yard” (Free Falling)
Semiconductors are the most worrisome as the closest one to the low of the new July 6-month Calendar Range. Transportation has a better chart position relative to Semi’s, but remains in a bearish phase and continues to elude its 6-month range high.
Although Biotechnology trades in the stratosphere, the late day sell-off put that just sitting a bit over the 6-month calendar range high.
Regional Banks have a really good shot at 45.00 and, as the one that began the 2015 rally in May, remains the one I have the most faith in. Tom Petty sings, “You can stand me up at the gates of hell, But I won't back down” and so sings our Prodigal Son.
Retail hasn’t done much since early April. All it needs to do for now is clear 101.24 and hold. Otherwise, back under 98, if looking for a bear signal, is my line in the sand.
Finally, Russell 2000. If IWM does not cross 126.50, we could be hearing, “Yeah runnin' down a dream, That never would come to me,
Workin' on a mystery, goin' wherever it leads.” (Runnin’ Down A Dream)
S&P 500 (SPY) Nearing the top of the 2015 range, peaking its head to see if there are any wolves around. Subscribers: Positive Pivots in SPY QQQ DIA Negative IWM
Russell 2000 (IWM) Sitting on the 50 DMA. More importantly is what happens if it takes out 124.48
Dow (DIA) Not close enough to the 2015 highs to think it can clear
Nasdaq (QQQ) 112 is the runaway gap support-now overbought-
XLF (Financials) This is helping carry the ball and also one good reason to hope it’s not all about NASDAQ
KRE (Regional Banks) 45.00 next resistance to clear on a closing basis with support at 43.98
SMH (Semiconductors) This is weak and no matter what, a very sobering sign for the market
IYT (Transportation) Inside day. Not wowing though after the recent bottoming pattern
XRT (Retail) 100 pivotal. Over 102.50 it’s golden
IYR (Real Estate) Better chart now move convincingly holding the 50 DMA
GLD (Gold Trust) Too a while but the break of 110 has pushed this ½ way to next target 100
SLV (Silver) Holding 14.02-marginally
GDX (Gold Miners) Even more RIDICULOUSLY oversold
USO (US Oil Fund) 15.60 is the 2015 low
OIH (Oil Services) remote possibility of triple bottoms-writing this more to myself as a don’t forget thing
TLT (iShares 20+ Year Treasuries) Unconfirmed phase change to bearish
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 1. Intermediate-Term Positive 5, and Long-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: (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:
*WETF Reports July 30th Consolidating from the recent move. For a day to mini use 22.36 max risk and has to clear 23.63
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 Inside day. Miniswing for risk purposes to Friday’s low 59.99. Then, has to clear 60.50 the pivots then 60.80 R1
*PBF Reports July 30th. Day to mini once it clears 31.17 and holds 30.58
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 178.69 has to clear 184 Any OR
GERN Reports August 3rd. Shouldn’t break under 4.00 and over 4.30ish has potential to go much higher
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:
*BC Tight risk to 52.14 the 50 DMA and like over 52.60 first then today’s highs for a mini since reports July 30th
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):
Z Reports August 4th New potential bottom if clears and confirms-risk 76.82
Focus List: *OC *HCA *UA daytrades
Shorts: Focus List *FLS *CMI *CAR all daytrades
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 68.50 Any OR
DISH 2 Inside days and like for more of a daytrade since approaching oversold
Category 6: N/A
Best Best wishes for your trading,
Michele Schneider
