“The Thorns Are Lovely This Year”
Morticia Addams
Although the Addams Family (the popular and way too short-lived 1964 American TV Series) thought themselves and their tastes shared by most of society, in actuality and what made them so funny was their culture clash with the rest of the world.
Our Economic Modern Family has had similarities in that as most global economies have well underperformed, last month and up until this week, several sectors of the US market had rocketed to new highs.
What now for our clan?
Granddad Russell 2000 (IWM) in a confirmed warning phase, has 2 distinct possibilities. First, to hit the 200 DMA, get way oversold and begin the bounce back as that also keeps it above the 2015 trading range lows. Second, to go the way of its weaker spawns, Transportation (IYT) and now Semiconductors (SMH), the former in a Bearish Phase and the latter in a Distribution Phase.
Grandma Retail (XRT), had an inside day after Tuesday’s spectacular comeback. However, under the 50 DMA yet above the May lows significantly as this point,Retail either needs to show leadership pronto and return over 99.50 or 96.00, the 200 DMA is next up (or down).
Prodigal Son Regional Banks (KRE) over 40.00 took out its yearlong consolidation form 2014 yet with pressure of the overall market, closed for the first time under the 50 DMA since the one day it also did so back on May 1st. KRE has to get back over 43.10 lickety-split or also faces the wrath of the 200 DMA, which ironically would be a return to where it originally broke out from.
Big Bro Biotechnology is fast approaching the 50 DMA as the last of the Family-our Gomez Addams (one who doesn’t seem to regard money as a priority and squanders it in a cavalier manner while remaining wealthy) - to actually be in a Bullish Phase. For now.
Semiconductors (SMH) at this point, we will look for a move down to 50.00 as a level of support, assuming it breaks the 2015 lows 51.84.
Transportation (IYT) is toast unless it demonstrates a dazzling comeback this week over 146.
A recurring theme of many Addams Family episodes was an update on the most-recent visitor to their home. Invariably, as a result of their visit to the Addams', the visitor would be institutionalized, change professions, move out of the country, or suffer some other negative life-changing event.
Behold Greece and China.
The Addams' would always misinterpret the update and see it as good news.
Hence, we and our Modern Family will be on the lookout for the typical signs of a bottom. Until then, we reside at 0001 Cemetery Lane.
S&P 500 (SPY) When all is said and done and for what’s it’s worth, SPY held Tuesday low. However, under the 200 DMA so bears in control. Subscribers: Negative Pivots
Russell 2000 (IWM) May low 120.24 and above 123 better
Dow (DIA) Inside day under the 200 DMA. 176.76 remains the number to clear
Nasdaq (QQQ) Inside day and second test of 106 close to the April lows. The 200 DMA is 104.78
XLF (Financials) Landed on the 200 DMA.
KRE (Regional Banks) As mentioned, this needs to get back over 43.10
SMH (Semiconductors) Second day of huge volume which is clearly liquidation and a possibly a blow off bottom in the works over 2015 lows
IBB (Biotechnology) Holding the 50 DMA-the only one of the family
XRT (Retail) 96.00 underlying support and over 100 this will have new life
IYR (Real Estate) 74.64 the 50 DMA resistance overhead
XHB (US HomeBuilders) Second day it held support and now over 37.00 even better
GLD (Gold Trust) Held 2015 lows, best we can say for now
USO (US Oil Fund) Striking is the volume patterns-massive liquidation which also could mean blow off bottom
TAN (Guggenheim Solar Energy) Ridiculously oversold-Subs-have a plan.
TLT (iShares 20+ Year Treasuries) Over the 50 DMA after dovish FOMC
UUP (Dollar Bull) support at 25.00
FXI (China Large Cap Fund) If there is a logical place to stop falling, the monthly moving average retested Wednesday is it
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 Negative 1, 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: (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:
*TPX If holds 66.85 like for a day to miniswing over pivots for ½ then R1 which matches todays high for an add.
Category 2: (Pipeline) Positive Phase, Condition 2-3, 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:
*OC If holds 40.40 after an inside day, then looks ok over 41.17 first then 41.50.
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)
*CME Inside day over the 10, 50 and 100 DMAs. Risk 93.50 area and over 95.25 good for swing
*FEYE holding the 50 DMA and if can continue t hold 46.45 today’s low, then might see a move especially if can clear today’s highs. Any OR
*TSO Slightly negative pivots. Has to hold 87.50 max risk. Over 92.74 at least after an inside day and would consider an ORR if it comes in over pivots 91.90
Category 4: N/A
Phase Change:
*FCE.A If holds 22.40 could have a chance if mkt is good to clear back over 22.85 with a good swing risk
Reversal Trades: (Glass or Brick Wall Bottom or Top):
*MAC Inside day after a good reversal off of the lows 74.51. Any OR since positive pivots can give a good risk and if clears 78.10 even better
SWI 46.24 has to hold and over 47.00 could see more upside for a miniswing
Shorts: If not already short, many are oversold. Shorts are starting to kick in in our other models. Our discretionary style is to go mainly to cash and find the ones going counter. However, note that emerging markets signaled short and some developed countries as well.
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
LNKD 209.50-210 area resistance and could see new leg down after an inside day. Any OR
Category 6: N/A
Best Best wishes for your trading,
Michele Schneider
