After writing a carefully thought-out piece on The Top 5 Characteristics of a Good Shepherd over the weekend, apparently I forgot the one about not falling asleep while tending to one’s sheep. ZZZZZZZ!
After the longest day of the year on Sunday, a sleepy rally occurred on Monday.
The usual gathering of the Economic Modern Family members ensued. Russell 2000s andBiotechnology made new highs, Retail held the pivotal 100.00 level,Semiconductors crept higher, Regional Banks firmed near the recent highs andTransportation recaptured 152.00.
A family that moves together-one thing we have learned this year with sheep-like trading- hasn’t always translated into a Family that stays together. Hence, we turn our attention to observing other developing relationships.
Monday began with optimism with Greece (Cousin Eddie) and no real fear of rising interest rates.
Soft Commodity prices moved up while diversion between the gold and silver(silver outperformed) became noteworthy. This seems to translate to a prevailing perception that signs of global growth are overriding a lot of other current concerns.
Sunday night, our typically quiet neighbors banged a drum repeatedly for about 30 minutes. Since we’re not talking Buddy Rich type drumming, I was about to lose it when the drumming suddenly stopped just as the sun set. It dawned on me that the drumming was meant as a ceremonial homage to the summer solstice.
Why this year and not any other years before this one, I asked myself? A lone drummer, welcoming the summer-what should we be welcoming?
Will it be a huge gap above recent highs in the other lagging indices? Will NASDAQin particular, take out 111.16 and continue to run or will it be the same run and then retreat as it has been doing all year?
Will a predicted El Nino have its way on the already parched areas around the world and the declining aquifers causing commodity prices to spark?
Will Greece resolve and world peace break out? (I think we will need a whole lot more drumming for the latter outcome!)
Or maybe, the neighbor bought a new drum and just needed an excuse to go outside and bang it.
Welcome to summer!
S&P 500 (SPY) Volume light, while this remains range bound Subscribers: Positive Pivots in all
Russell 2000 (IWM) Quietly unstoppable and not overbought
Dow (DIA) Back to an unconfirmed bullish phase which means has to defend 180.30 now the 50 DMA
Nasdaq (QQQ) Until we get a decent clearance over 111.16, lots of range bound noise
XLF (Financials) Last week I wrote that like the market, when looks great sell-I left out, when looks awful buy! Back near the highs from last week
KRE (Regional Banks) Back near the highs
SMH (Semiconductors) Over 58.47 better but good its clearing from the 50 DMA
IYT (Transportation) Back over the 152 area and weekly moving average-if stays here a very good sign
IBB (Biotechnology) Impressive move to new highs!
XRT (Retail) Granny has to hold 100 to keep the others happy-others I mean IYT SMH in particular
IYR (Real Estate) Buckled to the rising rates-but holding 74.00
XHB (US HomeBuilders) 36.98 is the highest weekly close since 2007- Maybe this week
GLD (Gold Trust) Typical lack of follow through type action since April-just as we were about to get interested too
GDX (Gold Miners)
USO (US Oil Fund) Noisy until it clears 21.50 or fails 19.00-note though over 20.45 clears calendar ranges
OIH (Oil Services)
XLE (Energy)
XOP (Oil and Gas Exploration)
UNG (US NatGas Fund)
TAN (Guggenheim Solar Energy) If holds 42.00 good and over 43.50 even better
TLT (iShares 20+ Year Treasuries) Ugly with a break of the weekly moving average if stays below 117.20
UUP (Dollar Bull) 24.33 is the 200 DMA
EEM (Emerging Markets)
IFN (India Fund Inc.) Interesting over 27.00
GREK (Greece) If this holds now over 11.34 seems 13.00 will be the next hurdle
EWP (Spain) *Subscribers: Gapped over the 200 DMA. Like now if holds 35.86 and confirms the accumulation phase
EWW (Mexico)
EWG (Germany)
EWI (Italy) Subscribers:
FXI (China Large Cap Fund)
EWY (South Korea) Subscribers: lows
RSX (Russia)
CORN (Corn) Looks like it wants to base
BAL (Cotton) So does this
DBC (DB Commodity Index) And this
SGG (Sugar) And this
JO (Coffee) And this
PHO (Water) And this
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 Positive 3, andLong-Term Positive 10. 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:
*AMZN 2 days under pivots-a good daytrade add if clears R1 439 and holds 436.60 5-30 min OR
*BID 4 doji days now and if holds 46.37 looks good over todays highs for a miniswing risk-over 47.00 looks even 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:
*LULU If holds 66.28 66.91 today’s high. Swing any OR since pivots positive
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)
*NFLX Daytrade mainly with risk to today’s lows. Any OR
*LLY Even though pivots are positive, it closed beneath. That means has to clear 83.00 and Friday’s low max risk. swing or mini ANY OR
JAH 2 Inside days. 52.86 is swing risk. Good over today’s high. Like the compression-might require some patience. Any OR
Category 4: (Rip Tide) Oversold (2 or more days under FTP), Condition 4, Needs to clear R1, Risk previous day low unless noted differently, Target- Day to at least 3 ATRs from entry:
*CME Not as oversold has positive pivots but didn’t close over them. Inside day. Has to Hold 93.44 and clear pivots 94.78 and then R1 95.10
Phase Change:
Reversal Trades: (Glass or Brick Wall Bottom or Top):
Shorts:
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
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 low
Best Best wishes for your trading,
Michele Schneider
