I Love The Smell of Manipulation In The Morning
After a discussion about China with my husband (and CEO of MarketGauge) Keith, we took our usual sides on the “for how much longer will the whole market hold up as the proverbial house of cards?’
Don’t get me wrong, we both agree about markets being rigged, blah, blah, blah. What’s new, right? Where we deliberate is on the impact of emerging news longer term as one’s trading influence versus sticking strictly to “life in the bubble” as a better indicator of how the market, by the time news circulates, is already focused elsewhere.
These discourses allow us to weigh the differing sides and viewpoints, hence give us pause or at least very careful consideration of where to put our portfolio’s (now super light) money.
No stranger to you or me by now, that is when I turn to our-wait for it-Economic Modern Family!
So que pasa con La Familia Moderna?
Before I go on, I googled that in Spanish. Fascinating that I stumbled on a page called Concepto de la familia moderna. The essence of the concept is that the Economic Modern Family has many different forms that modifies to reflect the ever-changing modern society.
Our Economic Modern Family fluctuates to reflect the ever-changing status of the overall market. This year, making it even more tantamount to track the family as we are still in a humongous trading range, sticking to buying the leaders on weakness and the selling laggards on strength works.
Which brings me to what started the 2015 rally-The Russell 2000 and Regional Banks (KRE).
If the Russell 2000 (IWM) is true to the longer term trend after breaking out from a yearlong consolidation in 2014, then IWM holding over 120 is logical with a second run for a match and possibly a takeout of the 2015 highs still probable. Under 120, everyone off the good ship.
Regional Banks (KRE) over 40.00 took out its yearlong consolidation from 2014. And really, one can say the move got legs over 42.00. The run to new highs gained momentum on June 3rd when it gapped higher and kept going. The low of that move was 42.65. Wednesday’s low was 42.74. Again, thinking logically, as a leading sector, this should hold and continue its ascent after the substantial correction.
More neutral to positive right now are Biotechnology and Retail. Semiconductors, still a concern, had a dramatic fall to the 2015 lows and thus far is holding them.Transportation looks as if a scab could develop on its recent bleeding cut.
A few weeks ago I wrote about John Nash’s Equilibrium Theory. “No single player can obtain a higher payoff than the other opposing player given that the outcomes are equally unknown. To put this another way, those outcomes are like trying to ascertain which came first, the chicken or the egg. It’s unpredictable.” 6/24/15 Daily
If KRE and IWM came first, logic dictates to watch if both the chicken and its egg can cross the road or go splat.
S&P 500 (SPY) Volume remains notable with a second break of the 200 DMA spelling caution. Subscribers: Positive Pivots
Dow (DIA) 173.71 a major weekly moving average now that this is under the 200 DMA for a second day. Really, a move over 178 is the white knight this needs to save it
Nasdaq (QQQ) Seems destined to go to the 200 DAM unless this 106 holds once again and we see a return over 107
Volatility Index (VIX) Looking at daily, weekly and monthly charts, on the daily, 2015 highs 23.31-overbought on the short term RSI, weekly showing overbought as well. Most significant-monthly chart show no close over the 80 month MA since 2012 and only once that year. That number now is 20.94. Conclusion-somewhat bloated at these levels and nearing historical resistance
XLF (Financials) Financials are holding relatively. 24.12 key support
SMH (Semiconductors) Oversold and marginally holding 2015 lows. 49.90 or so is the target.
IYT (Transportation) Inside day near the lows of this move
IBB (Biotechnology) Inside day and still holding the 50 DMA-this and KRE the family leaders
XRT (Retail) 96.00 underlying support and over 100 this will have new life
IYR (Real Estate) 74.54 the 50 DMA resistance overhead
XHB (US HomeBuilders) Not in the family but in a bullish phase
GLD (Gold Trust) Held 2015 lows, best we can say for now
SLV (Silver) Possible island bottom if this does not break beneath 14.62
USO (US Oil Fund) 18.00 is the number to clear or this was just a couple of day correction
TLT (iShares 20+ Year Treasuries) Under the 50 DMA-as confused as the FED must be right now
UUP (Dollar Bull) support at 25.00
FXI (China Large Cap Fund) Possible island bottom if this does not break beneath 40.20
EWY (South Korea) Subscribers: Like FXI possible island bottom if holds above 52.95
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 Negative 6, andLong-Term Positive 0. 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: N/A
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)
FEYE Day to miniswing if holds today’s lows around 48.80. Any OR
*HCA 2 inside days. More of a mini to daytrade, risk is 90.47 and has to clear 92.18. Any OR
*PANW Cleared the 10 DMA so a good miniswing risk to 173.65 and like better over the 10 DMA at 174.48 Any OR
*BYD Inside day. Max risk 15.22 with over 15.80 good for another leg figure mini to swing Any OR
*TSLA Risk for swing is 251 but for mini can use 255.45 S1 and like on any OR since pivots positive.
Category 4: N/A
Phase Change: N/A
Reversal Trades: (Glass or Brick Wall Bottom or Top):
GPRO 2 inside days. Can use really tight risk now to see if this has anything. 51.70 S1 risk and clear 52.70 for miniswing Any OR
Shorts:
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
*AMP If the market fails good place to go for a day to mini under S1. Risk will be 124.90
*GOOG Reports July 16th so day to mini max. Has to break S1 and risk is 524.00
*HOG Inside day. Any OR and risk is day to mini for now. Needs to break 54.27 and resistance 55.20 R1
*OXY Really, needs to break 72.00 where there are triple bottoms. Then risk is to swing or maybe mini around R1 of that day
Category 6: N/A
Best Best wishes for your trading,
Michele Schneider
