Thus far, this earnings season which has yielded some extraordinary surprises-especially in Wednesday’s post market session-Facebook, Trip Advisor and Baidu to name a few. Actually, when it comes to the world ofsocial media, those huge gains really do not come as a surprise. What is a bit hairy right now are the indices and the near drama of a complete meltdown which almost occurred but did not totally occur after all. In other less verbose words, the S&P 500 confirmed a brick wall high pattern but held the fast moving average. TheRussell 2000 had a similar scenario yet did not hold the fast moving average while the Dow with a somewhat nasty red candle day, closed nearly unchanged. To complete (or really incomplete) the picture, NASDAQremains in purgatory stuck between the gap low support from July 11th and the ever-so pivotal 75.00 level just under the fast moving average. Add low volume, bull phases and some real damage in sectors likehomebuilders, real estate, oil and gas, semiconductors and you got a big ole whopping pea soup clear as mud scenario! Rising rates and firming US dollar to blame? Well of course the Fed will taper at some point. That news is recirculating and becoming super annoying. Be that as it may, our closed positions increased in our portfolio leaving us profitable, underexposed and ready for anything!
S&P 500 (SPY)A brick wall high does not always necessarily mean the market will go straight down. Just check out the action after the May 22nd candle. The key is if it clears the recent highs and how it acts around moving averages Subscribers: Pivots Negative in this, DIA and IWM-check out SDS with its reversal pattern off the lows
Russell 2000 (IWM) 104 failed to hold with 101.94 the gap low from 7/11. And unless this clears recent highs, rallies look like sell opportunities
Dow (DIA)155.74 would have to clear now, 155.14 the May 22nd high remains pivotal with 153.71 the gap low from 7/11.
NASDAQ 100 (QQQ) Subscribers: Positive Pivots here with 75.00 the number to clear
ETFs:
XLF (Financials)Confirmed the reversal pattern from the highs which does not always necessarily mean the it will go straight down. However, until it clears the highs remain defensive
SMH (Semiconductors) Unconfirmed warning phase. I believe I began this week stating that this sector is not critical to an economic recovery, but I personally like when they are at the party
XRT (Retail) Broke a 9 day channel so unless it clears and closes back into it, consider this toppy for now
IYT (Transportation) Transportation gave a clue yesterday but now have the 50 DMA pretty close by
IBB (Biotechnology) Actually, after Tuesdays damage, this is a brighter spot than the others since did not confirm that reversal from new highs
IYR (Real Estate)Landed and held the 200 DMA. If that continues to hold better sign, if not, would not be too enthusiastic about the market going to new highs soon
GLDBack to an unconfirmed bearish phase with an island bottom still intact
USO (US Oil Fund)Topping action for sure with 35.00 a support level
XOP (Oil and Gas Exploration) Made a new 2013 high by one tick and closed lower on Tuesday-looking at today’s action-not a good sign Subscribers: Still has a shot to close over 60 on the month
TBT (Ultrashort Lehman 20+ Year Treasuries) Subscribers: Kept ½ position for swing wanting to see today’s low hold
UUP (Dollar Bull) 22.32 next point to clear
EWG (Germany) It’s all about the 50 DMA now
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:
WAG 51.22 really is the point to clear with today’s low max risk. Then, like for another leg up
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:
BIIB Inside day on the 50 DMA which means today’s low max risk. Like over R1 and today’s high. 248 not out of the question
P If this can hold 17.50-60 level, R1 and today’s high line up. All time high was 26.00 back in 2011
FDO If you use today’s low as max risk, then over today’s high lines up with the 10 DMA and R1.
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)
SYNA Reports August 1st. 2 inside days.Like to see today’s low hold and if clear todays highs and R1 has next resistance around 44..00
GCI Almost had a second inside day. Has to hold 25.77 and clear R1 and today’s high which line up. This is one we held until earnings, exited, but overall like because its over the 80 monthly moving average.
Category 4: (Rip Tide) N/A
Phase Change and/or Slingshot Lows:
GMCR Reports July 31st. Took off another piece of it today but if can hold 73.75 and clear today’s high still ok
KMP Phase change to accumulation if holds today’s low max risk. Inside day so like over Tuesday high 86.85
INTC a possible new low then close on the intraday high means over today high confirms a buy with today’s low the risk
AAPL Unconfirmed phase change to recovery provided it holds 435.74 S1.
Shorts:
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
MON gapped lower and now today’s high good risk point. Look for move to the 200 DMA
Watching GLD, Copper to see if follows through to downside but not making an official recommendation just yet
Category 6: N/A
Bye for Now!
