Friday was a nap after the dramatic action of the week. The phase change to warning confirmed in all (alas) indexes except the small caps which closed marginally over the 50 Daily Moving Average, therefore going back to an unconfirmed bullish phase. NASDAQ has a weak warning phase as the slope on the overhead 50 DMA remains up. However, both the S&P 500 and the Dow, have begun to see a downturn in the 50 DMA indicating the warning phase could be accelerating. There’s been a lot of buzz about the FED, the economy, tapering and what it all means going forward. With the mixed signals among the 4 indexes-weak versus accelerating warning phases-with one in an unconfirmed bullish phase, the possibility for more downside seems likely, especially since the bounce on Friday was anemic after the drop that preceded it. Therefore, as much as I want to root for the underdog, unless either NASDAQ (QQQ) clears the 50 DMA and the Russell 2000 (IWM) stays over the 50 DMA, the sentiment remains defensive.
S&P 500 (SPY)Has corrected down to the April highs which could offer some support. But, as per my comments above, the return of a robust rally seems less likely for now unless the others bust out.
Russell 2000 (IWM) Unconfirmed bullish phase and a good confirmation would be a move over last Thursday’s high 96.88. If it fails the 50 DMA first thing, go with it.
Dow (DIA) 146 giving this some support and only a move over 150 or so would be encouraging
NASDAQ 100 (QQQ)Also held April highs with the weak warning phase-perhaps we could see a climb to the 50 DMA then a failure-only a move over the 50 DMA would be a game changer.
ETFs:
GLDStarted some semblance of a bounce Friday in spite of the strong rates and dollar. 130 is great resistance and 115 the eventual target Subscribers: Highly improbable but at least something to be aware of is this and a lot of miners, if gap above last Thursday’s high, could set up for an island bottom
XLF (Financials)18.82 is the gap low from the day this started the runaway gap.
IBB (Biotechnology) Oversold but see no bottoming formations here at time of writing
SMH (Semiconductors) 35.45 is far yet, and the low of the runaway gap move. And, like NASDAQ is in a weak warning phase-at this point, a monthly close over or under 37.50 should help clarify next direction
XRT (Retail) Broke the 50 DMA for an unconfirmed warning phase. Another nail in the oversold coffin.
IYT (Transportation) There is a trendline from the April lows to Friday low-a valid one that if breaks spells more ugliness. But if holds, will look at what happens near the 50 DMA
IYR (Real Estate) Unless this gaps over Thursday’s high, 65.77, the rallies are probably sell opportunities
USO (US Oil Fund)A mess. Confirmed an island top, back in a bear phase (unconfirmed).
OIH (Oil Services)Interesting that it held the old June low, made a new one then close back over 42.29. Good area to watch
XLE (Energy) Broke 78.00 then closed above it. Under 78.00 again, should see more selling
TBT (Ultrashort Lehman 20+ Year Treasuries) Thursday’s gap higher led to more higher prices Friday.
XOP (Oil and Gas Exploration) Touchdown on the 200 DMA-but no fans are cheering.
XHB (Homebuilders) Close to the 200 DMA and made a new 60 Day low. Watching.
UUP (Dollar Bull) Got close to the 50 DMA after returning over the 200 DMA.
SGG (Sugar) Subscribers: Held Thursday’s low and ended with an inside day. Waiting for a phase change to recovery to confirm a bottom is in place
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:
GCI I am long a very small position based on its holding Wednesday low and the gap up. And, if this can clear R1 24.20 might add. Stop under the 10 DMA 23.39
YELP Like to see 30.75 hold for a reentry over 31.92 and resumption of its move to new highs
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:
GT Over R1,the 10 DMA and Friday’s high, looks a lot more interesting with a risk to 14.50-the 80 monthly is overhead 16.24
Category 3: (Double Up) Positive Phase, Condition 1 through 4, Positive Pivots which means can eitherbuy 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)
PNC Returned to a condition 1. Like with risk to Friday’s low especially over 72.00 with the eventual need for this to take out the brick wall high 73.00 to stick for a swing
SPLK Big eyes here on Monday. 43.47 is the 50 DMA to hold and over Friday’s high and R1 don’t exactly line up, but would prefer both to clear
LTD Held the 50 and over the 10 DMA. If 51.13 S1 can hold, look at a move over 52.00 and close there to stick with the trade.
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:
OXY Held the 50 DMA with an inside day, but has to clear Thursday’s high 90.94.
Phase Change:
MBI Keeping it here, but has to clear 13.00 to get me real interested now
RDC Confirmed an accumulation phase provided it holds Friday’s lows. 34.50 is a key area to close above
CRM A brick wall low. Looking for follow through if holds Friday’s low-but a real confirmation is a close above Friday’s highs
WMT Inside day, unconfirmed phase change to warning and outperformed market. Really needs to clear 74.75
Shorts: May have to wait for some white cap patterns now
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
XOM Inside day. Under the 200 DMA. Risk 90.11 the 50 DMA and under 88.79 could see 87.00 next support.
Bye for Now!
