As positive as the market looked coming into this week and as positive as it may continue to look heading into the lazy, hazy days of summer, if there is one lesson to be learned from 2014-this is not 2013 nor is this a year to rest on long or short laurels for too long.
However, with that said, reading the analysts who live to be right, one digestion day, and the tweets come out calling for the top, which is probably the best reason to think we are not even close to that yet.
After all, the overall participation in the market is scant-the players are the active investors and the HFTs, which probably explains the contrarian nature this year-sell when everything looks great, buy when the bottom is falling out.
Be that as it may, never confuse a low volume sell off with a top. Yet, continue to trim profits into the rallies and use logical, systematic risk management when buying strength.
If rates continue to firm and TLTs fail a critical chart point, assume US Manufacturing and Retail can hold up and find higher levels.
S&P 500 (SPY) Day 10 and counting of the breakaway gap and lots looking for some correction. Volume super low Subscribers: Positive Pivots in all
Russell 2000 (IWM) Another fine day with 115.11 good point of support now
Dow (DIA) Similar candle to SPY today-kinda doji-hammerish looking with low volume
Nasdaq (QQQ) Resting
XLF (Financials) Started strong and see nothing resembling a top although a correction is always possible
KRE (Regional Banks) Overbought now but that’s ok
SMH (Semiconductors) Joins DIA SPY with that inverted hammer doji candle-which doesn’t mean much on low volume and without a second day confirmation
IBB (Biotechnology) Nice start-sort of blah finish but strong
XRT (Retail) Hit resistance-will watch carefully
IYR (Real Estate) Big day tomorrow watching if can hold the fast moving average or not
ITB (US Home Construction) Hitting resistance but overall good
GLD Will go south until rates firm
XME (S&P Metals & Mining) Subscribers: confirmed accumulation phase
USO (US Oil Fund) Woke up again and now should hold today’s lows if there is more to upside
OIH (Oil Services) New highs and getting overbought
FCG (First Trust ISE Reserve NatGas) 22.30 support with another good looking chart if clears 2014 highs
TBT (Ultrashort Lehman 20+ Year Treasuries) TLTs hanging onto the 50 DMA for dear life-will be fascinating to see what it does from here
PHO (Power Shares Water Resources) 27.23 2014 high
UUP (Dollar Bull) Back to testing the 200 DMA
EEM (Emerging Markets) Breakaway gap follow through
IFN (India Fund Inc.) Parabolic mode
FXI (China Large Cap Fund) New high close for 2014
SGG (Sugar) Subscribers: Potential brick wall bottom -live over 54.45 on a closing basis (3 levels of position-1/4 over 54.60, more over the 50 DMA and mover over the 200 DMA)
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:
SPWR If holds todays low and the 10 DMA or around S1, like over 34.20 better
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:
CI Has to clear 90.50 to be good or interesting
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)
PEP Has to clear 88.48 now to get going
EW Tested and held the 50 DMA at 80.40. Like over 81.19 or R1 Tuesday
PM Has to clear 88.80 and hold a dollar lower
CTRP Negative pivots but keeping it here if it breaks 58.00
CVX Miniswing only against the inside day today and Friday’s low
XOM 102 point to clear now with 101 area to hold
GOOG Although prefer ORR, this still looks good against todays low
Category 4: (Rip Tide) N/A
Phase Change:
P Pushing up against the 50 DMA 25.80 and if clears back in play
VXX closed up on an up day-no volume and small range, but a reversal from new lows therefore worth watching
Shorts:
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
COG Converging moving averages and under them all. If stays below 36.54 looks good down to 33.00 or so
VLO confirmed warning phase. Cannot clear today’s high
Category 6: White Cap-Having a 2-3 Day correction over the pivots.. In a Negative Phase, Positive Pivots. Can sell an Opening Range High Failure if happens below R1 or previous day high whatever is higher and/or weakness if breaks S1 and prior day’s lows
POT Has to break S1 and not clear 35.86
LNKD Like under S1 for new move down
Bye For Now!
