First, I would like to thank Mathew Mullins for writing the daily and handling my premium subscribers so deftly while we drove across the country!
Secondly, I would like to thank Mr. (Ms.) Market for making my first day back a slow, methodical correction after the Dow closed above 17,000 last week.
For those of you new to my MMMDaily, welcome! I try to mix top down analysis, with specific trading guidelines whilst adding a spoonful of sugar through levity.
July 1st ended the first 6 months of trading activity for 2014 and began the second ½. Looking at July as a sort of reset, we have 2 views. One is the monthly calendar range of the high/low of the indices as of July 2nd. The second view will happen after the first 2 weeks of trading in July are in place.
Based on preliminary observations, we begin with diversion once again. After the Russell’s tested the early March high, Monday’s session watched IWM fail the high and low of the monthly calendar range.
SPY failed the monthly high, but held the monthly low. DIA and QQQs held the monthly high marginally. What this information tells us is that the new highs put in place last week are not yet trustworthy.
I am not saying we are at a top-way too soon to predict any such thing. What I am saying, is either the cream has to rise to the top or, the market will sink to its lowest common denominator. With the official start of the earnings season, the timing is precarious.
We will look at the usual suspects-Semiconductors, Financials and Interest Rates for further clues before taking any heavy stance portfolio-wise. Semiconductors continue to shock and awe-a good sign. Financials need to hold around 22.80 and Interest Rates or in this case, the ultrashort TBTs needs to hold 62.00.
Bullish phases are intact. At this moment, signs point more towards correction after a pre-holiday run. But again, not much skin in that game just yet.
S&P 500 (SPY) 196 good support level to hold and the low of July this far. Otherwise, over 198 looks good. Subscribers: Negative Pivots in all
Russell 2000 (IWM) 117.50 some support and 116 even better. Over 118.40 on a closing basis good.
Dow (DIA) If holds Monday lows, really good, under can see 168.80 area.
Nasdaq (QQQ) Looks more like digestion therefore remaining a leader for now
XLF (Financials) 22.80 key support
KRE (Regional Banks) Subscribers: July calendar range breakout now 41.30. Like to see 40.33 hold
SMH (Semiconductors) Possible reversal candle but needs a second day confirmation and has to fail 49.65
IYT (Transportation) Dropped to support if holds today’s low
IBB (Biotechnology) Big correction to support around 258
XRT (Retail) 86.85-87 where it broke out from now has to hold
ITB (US Home Construction) Hard fall into support
GLD Not an easy pattern to read here
FCG (First Trust ISE Reserve NatGas) On the 50 DMA now
TAN (Guggenheim Solar Energy) Broke days of work with 43.00 next support area
TBT (Ultrashort Lehman 20+ Year Treasuries) 62.00 support area although now back into an unconfirmed bearish phase
FXI (China Large Cap Fund) Inside day and over a key weekly moving average
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:
RHT 55.40 key support at the 10 DMA and if holds and clears 55.80 and then R1 could set up for a new swing
LNG 70 the major support. Over today’s high and R1 could see action in the as it outperformed the market
Category 2: (Pipeline)N/A
Category 3: (Double Up) Positive Phase, Condition 1 through 4, Positive Pivots which means can either 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)
JNJ broke out to new highs now more of a day to mini especially on an ORR
EQR Inside day. 62.85 support and like over R1 63.40
VZ 49.40 support and like over R1 or 49.89 with upside potential
GMCR Inside day and basically neutral pivots. Really should clear 128.46 and hold 123.35
Category 4: (Rip Tide) N/A
Phase Change:
STT Confirmed the accumulation phase –has to hold 67.80. 68.27 is the 200 DMA
DDD Has to hold 58.70 and clear 61.81 and today’s high to try for the overhead 200 DMA
Shorts:
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
COG 34.50 closest resistance for a possible break of the 23 monthly moving average or 33.30
WFM 39 resistance with support 38.45 to break for more downside-like for more miniswing
Bye For Now!
