Frequent and devoted readers: Small caps (Russell 2000s) have been a tell for us for quite some time. Friday, they closed on new highs. But more importantly, as the July 4th holiday gave me time to reflect on the market and its other signs, it occurred to me that the short bonds (TBTs), the US dollar, and the other indexes (although until Friday were in weak warning phases and now all ended the week in unconfirmed bull phases), were sending a loud and clear signal. This “punchbowl” I’ve been reading about is accurate. The slowly recovering economy, positive jobs report, the move towards energy independence, DOMA, Sep-tapering (kudos to that title creator) along with manufacturers beginning to bring their businesses home- clothing industry namely, this punchbowl is full and spiked! We still have the May 22nd highs in the indexes to clear, but heck-pass the ladle!
One note: Monday kicks off earnings season with Alcoa first up.
S&P 500 (SPY)Unconfirmed bullish phase.It still has to fill the 6/19 gap to 163.38 with Friday’s high 163.08. All good unless it fails the 50 DMA from here.
Russell 2000 (IWM) Gun to head this will gap up again Monday and has to clear 100.38 the all-time high as well. If not, watch 98.75 to hold then 98.15
Dow (DIA) )Unconfirmed bullish phase.151.05 is the gap low from 6/19 that for real bullish scenario is the area to close above.150.50 is the 50 DMA to hold
NASDAQ 100 (QQQ)Unconfirmed bullish phase. Has to fill the gap to 72.68. One to watch with AAPL’s red close on Friday.
ETFs:
XLF (Financials)19.50 pivotal and 20.00 a great breakout.
SMH (Semiconductors) Over the 50 DMA and filled the 6/19 gap. Now, 37.90 key support with the last swing high new point to clear.
XRT (Retail) Next hurdle is the 6/19 high 78.89 but been a great leading sector even when the rest of the market was correcting
IYT (Transportation) So close to 112, the 50 DMA making this really important to watch. It has to clear the 50 DMA or like the Russells are for the early bulls, this could be for the early bears
IBB (Biotechnology) Some resistance coming up at 183.60 but well done here! Friday’s low support to hold now
IYR (Real Estate)If there is a sector concerned about rates for the time being, it’s this one. However, still watching for a move back over the 200 DMA as a great indication, that news is absorbed.
GLDThis definitely like the notion of higher rates. Did hold recent lows by quite a bit so not writing this off just yet. Subscribers: Has to clear 118.61 R1 for another shot.
USO (US Oil Fund)Overbought now but what a move clearing the 200 weekly moving average first time since September 2012.
OIH (Oil Services)Back to unconfirmed bullish phase. Subscribers: Cleared the 80 monthly moving average at 43.80
XLE (Energy) Cleared 80.00 Still in warning phase however until it clears the 50 DMA
XOP (Oil and Gas Exploration) Unconfirmed bullish phase-needs to clear 60.00
TBT (Ultrashort Lehman 20+ Year Treasuries) Highest level since March 2012. Will be really interesting to see what the would-be tapering really does to rates and the market longer term
UUP (Dollar Bull) Subscribers: Raising stop considerable-and watching to see if can clear 23.00
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
**NOTE: Lots of phase changes (especially if near, recently cleared or could clear the 80 monthly moving average) which are the major focus for Monday if the market holds up. Note your earnings dates.
Category 1: (Aloha) N/A
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)
ISRG Reports July 18th. Putting this here as will be looking into long straddles ahead of earnings. Compressed between the 50 and 200 DMA which means highly likely big move coming one way or another
MNST Like Friday’s low for support. On weekly and monthly chart see potential for move to 72.00
TRIP 60.80 the new closer support to hold now that it cleared the 50 DMA. 63.00 is the next reasonable resistance to clear then recent all-time highs
BA Using S1 103.20 as closest risk after Friday’s move, once this clears 104.15, should go onto new highs with 109.50 level good target
Category 4: (Rip Tide) N/A
Phase Change:
MON 98.17 the 200 DMA is now the support as this went back to an unconfirmed warning phase. It also has to clear the 10 DMA at 99.67 to keep looking like a base
EQR If IYR can absorb the tapering possibility; this one is above the moving averages all converging. Furthest risk is 56.13, Friday’s low, next risk 56.67 the 200 DMA, closest is the 50 DMA 57.36. Multiple days under pivots, therefore, R1 58.03 is what to wait for to clear. 58.80 recent highs but if that clears see move to 61.00 high from May 21.
PFG Reports July 25th. Cleared the 50 DMA. Crossed the 80 monthly 3 months ago (34.82) A reversal would work and also has to clear 38.20 gap from June 19th. Support 37.46 the 50 DMA
GE Reports July 19th Unconfirmed bullish phase over the 80 monthly moving average. Really like to see this clear 24.00 again, but for now, 23.00 is a good tight risk
GILD Reports July 25th. Friday’s low max risk 52.27. Over 53.56 can see pop to 58-59 if market stays firm
HOG Reports July 25th. Friday’s low and S1 good risk. 55.50 good point to clear to see 58.00 or better
MBI Now, 13.48 the 50 DMA tight risk with a move over 13.85 reasons to think bigger move even up to 16.00 recent highs
MAC 59.95 risk with the 200 DMA 61.24. Through 61.73, could see move to 67 or higher
RCL Just crossing the 200 DMA and above the 80 monthly moving average. Friday’s low good risk and over 34.52, could see move to 38-39 or higher
Shorts: Nothing now until some of the oversold stocks setup again
Category 5: N/A
Category 6:N/A
Bye for Now!
