Here is my question and I suspect one that is on the mind of most active investors-does one go short in a bull market only to find out this is a 2-3 day correction that turns right around to make another stab at the highs or new highs OR does one go long and risk that this correction is really the start of something much more severe with way more downside risk?
With that said, let’s examine my “go to’s”. Beginning with the Russell’s-they clearly have returned to the status of “weak” sister with the largest percentage drop. However, the phase remains bullish and the 116 support area intact.
Semiconductors-50.53 was the number to clear to negate confirmation of a topping formation (new high then failure over 2 days). Therefore, today confirmed the “brick wall” high. 49.65 is the July low, however that held so far.
Interest Rates-The flight to protection is alive and well considering the 20 Year Treasury Bonds move back above the 50 DMA. However, it does need a second day to confirm the improved phase change to Bullish.
Add those 3 together and one sides more with a case for healthy correction than end of days, but with the notion of a major cash holding until that proves itself out further.
S&P 500 (SPY) Held the July calendar range low at 196.13. Over 197.07 could see new lifeSubscribers: Negative Pivots in all
Russell 2000 (IWM) 116 held with 117.50 a pivotal area to clear
Dow (DIA) 168 good support for now with 169.50 a good point to clear
Nasdaq (QQQ) Closed above the July 1st low (calendar range) at 94.20.
XLF (Financials) Although it broke 22.80, it did so marginally and so, back over there, wouldn’t rule this out yet
KRE (Regional Banks) Really, has to break over 41.30. Like to see a move over 40.33 early Wednesday.
SMH (Semiconductors) 49.65 low to hold and a move over 50.59 much better
IYT (Transportation) Has not confirmed a topping pattern and actually held up a lot better than most
IBB (Biotechnology) If this can clear back over 259 back in biz-otherwise, the 250 level is substantial support
XRT (Retail) If 86.85-87 where it broke out from clears again, good sign here too
IYR (Real Estate) 71.70 pivotal
GLD Not an easy pattern to read here although phase is bullish
OIH (Oil Services) Would not rule out if clears 57.07
FCG (First Trust ISE Reserve NatGas) On the 50 DMA
TAN (Guggenheim Solar Energy) Big drop-very interested in seeing what happens around the major moving averages.
TBT (Ultrashort Lehman 20+ Year Treasuries) TLT 112.20 is the 50 DMA to hold or not
EEM (Emerging Markets) Looks better with today’s correction a good point to hold
EWG (Germany) Will the win over Brazil help this country fund? The 200 DMA sits real close at 30.58
FXI (China Large Cap Fund) 37.80 major support to hold with 38.30 point to clear
SGG (Sugar) Subscribers: Futures did not have the same brick wall bottom as the ETF did but a bottom of a channel is holding
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:
AXL Like over today’s high and R1 which will also clear highs going back since April.
TEX If holds today’s low then like a lot over R1 41.66
EW 86.50 max risk with a move over R1 87.32 a good point to clear
LNG 70 the major support. Over today’s high and R1 better
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)
EQR Tried for new highs but didn’t clear on a closing basis-now, has to hold 63.40
NWL 30.96 is the ultimate low to hold with a move over 31.88 interesting for another leg up-pivots are negative-keeping it here since outperformed
AAPL Held up well with the recent upgrade. Like if holds 93.90 and can clear 96.78 or R1
Category 4: (Rip Tide) N/A
Phase Change:
KSU If holds today’s low 107.88 will confirm an accumulation phase. Could see 114.50-115 target
X Over R1 27.44 like with risk around 26.25
STT 67.35 calendar range low as support with now, a must clear back over the 200 DMA at 68.26
KSS 53.21 takes out July’s calendar range high and the risk is 52.71 if that happens
MRVL over 14.74 takes out July’s calendar range high and after the slingshot low is good for a swing against the 200 DMA
GLPI look for 35.00 to be support with a move over today’s high 35.70 a good Miniswng to swing trade
PM Only interests me if gaps over 86.91 leaving a bottoming formation
Shorts: On Focus list have DE KORS on watch
Category 5: Titanic-N/A
Category 6: White Cap-N/A
Bye For Now!
