Typical to see a market bull run (like the one we have had since 2013) in anticipation of an improving economy, only to see the market sell off or run out of steam once the evidence emerges to support that economic improvement.
Back on June 7th, I wrote about the leadership of the Russell 2000s and how the Dow lagged up to 10 days once before this year before it sold off. June 16th, while IWM was tanking, DIA made new highs-nearly 10 days later. Then, the rest is history with DIA testing but closing marginally above the 50 DMA during Wednesday’s session.
Is this the top you might be wondering? Right now, the market internals suggest neutral with no real advantage for swing traders here long or short. Will wait for that indicator to tell us otherwise.
In the meantime, the market seems to tell a story of trendless, sideways action, the kind that makes trading difficult-be wary of so called “smart” traders right now-only seek smart systems that protect you during the rougher times.
One last tidbit-also something I have written about over and over-if the market is to hold, watch Retail, the Financial plus Regional Banking sectors to take the lead. Then, follow that money trail. If they don’t cut it-could be the first “real” sign that the market needs a serious correction.
S&P 500 (SPY) Tested and held the trendline from the runaway gap on May 27th. Over 198 see another run to highs under 196.50 may be move to 50 DMA Subscribers: Positive Pivots in IWM QQQ Negative SPY DIA
Russell 2000 (IWM) Unconfirmed phase change to warning-that’s an improvement-need a second day to confirm
Dow (DIA) Held the 50 DMA with some end of day buying-so interested to see what happens Thursday!
Nasdaq (QQQ) 96.60 the new pivotal area. Closed green with over the average daily volume-that’s not bad
XLF (Financials) 22.99 and above good news
KRE (Regional Banks) Over 39.35 time to go in
SMH (Semiconductors) Great reversal here-Does have upside resistance now though
IYT (Transportation) Inside day
IBB (Biotechnology) This went right back to the 260 resistance-if anything that has to clear or might just consider this a run to the top of the new range
XRT (Retail) Unconfirmed improved phase change to warning-questions are will that stick and will it clear the 50 DMA next? Strong dollar, higher rates-makes sense that it can
IYR (Real Estate) 73.00 pivotal and can also be seen now as resistance
ITB (US Home Construction) Made a new 2014 low but closed above the old one at 22.58
GLD 124.05 support and could be in trouble again
XLE (Energy) Looks like it will move over as leader with the new paradigm given the strong dollar
TBT (Ultrashort Lehman 20+ Year Treasuries) If this is not just a one day comeback, then look here against 58.75 for support
UUP (Dollar Bull) New 10-month highs
SGG (Sugar) Subscribers: I would at least watch to see what happens as futures matched the 2014 low today
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) N/A
*NOTE: If the risk to the 50 or 200 DMA is more than 1-2ATRS of risk, assume that the trade is a miniswing trade. Swing denoted with a * Also not including anything that reports within 3-4 days of writing list
Category 2: (Pipeline)N/A
Category 3: (Double Up) Positive Phase, Condition 1 through 4, Positive Pivots which means caneither buy 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)
*LNC Return to the 10 DMA 52.00 max risk with a move over 53.10 positive
TIF Brick wall bottom with risk 97.57 for swing-therefore, watch for an ORR best to trade
SU Reported Might gap big but would then look for an ORR instead of chasing
*PANW Reports 8/27 Tough day to get long, but this did what it was supposed to do. Now, like an ORR better
FB Far from risk but if good, should see 74.10 area hold
*KMX Inside day and setup now with risk to 49.43. With positive pivots can look for an ORR or breakout over 50.16
NWL Reports before open 31.30 good support with this being a 2014 pick so work looking at for a swing
*BKS Inside day and over the 10 DMA. Like the risk to 21.93 with a move over 22.49 good to go
*ADSK Reports 8/14 Over todays high looks good with upside potential and risk to 54.86 the 50 DMA-a fave
Category 4: (Rip Tide) N/A
Phase Change:
*FSLR Reports 8/6 2Inside days over the 50 DMA with risk 65.32
*STM New brick wall pattern emerging if takes out 8.52 with a great risk to 8.31
Shorts:
**NOTE: Thinking that we should use daytrading risks on shorts and only carry overnight if closes in our favor-while market in bull phase
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
*PSX Reported Unconfirmed phase change to warning with 81.39 the 10 DMA support. Now, if that breaks have a risk to 82.35 for a hybrid swing
POT Has support 35.50 but under that see nothing much til the 200 DMA 34.20
D Reported this morning. I would watch this for an Opening Range high failure to control risk-but also consider a 5 min breakdown if gaps under the 200 DMA
Category 6: White Cap-N/A
