4 gaps higher on the indexes this week and although trading the system consistently, my overriding question continues to be “When does the other shoe drop?” I see a strong US Dollar (bullish phase in fact), rates dropping some from their recent highs, 3 out of 4 indexes in a weak warning phase (our friend the small caps-Russell 2000 went into an unconfirmed bullish phase), most important sectors also in warning except for retail and financials-yes important but can be lonely at the top), and, last but not least-a seed change at the Federal Reserve with new candidates lining up for Ben’s job. Tomorrow is Friday-that I am sure of!
S&P 500 (SPY)Hammer doji. Close under the 10 and 50 DMAs-whether you’re wearing Jimmy Choos or Crox, if this cannot get over those moving averages, prepare for bare feet. Subscribers: 4 days up and possible we could see the 50 DMA. Equally possible this could be a white cap in the making if breaks S1.
Russell 2000 (IWM) Got the phase change, albeit unconfirmed. Now, we need to fill the gap to 98.16 and close above, or this love affair is short-lived
Dow (DIA) Soooo close but not quite over that 150 that would give encouragement
NASDAQ 100 (QQQ)Sort of looks like SPY, only weaker. Under today’s low, trouble
ETFs:
XLF (Financials)Confirmed bullish phase and a monthly close over 19.20 is key
SMH (Semiconductors) 37.60 is important on a lot of levels-it keeps the recent channel breakout on the monthly charts intact and it crossed the 50 DMA. So, if this cannot get and stay there, vulnerable
XRT (Retail) Confirmed bullish phase making today’s low real important
IYT (Transportation) 108.20-108.65 an area to hold. And of course, the 50 DMA is the area to clear
IBB (Biotechnology) Like everything, good day but needs more
IYR (Real Estate)The day this bottomed, the volume was strong-a mirror to the day it topped out. However, the phase remains weak and the 200 DMA a barrier to cross. Otherwise, good place to go for shorts if market turns.
XHB (Homebuilders) Popped right up to the 10 DMA.
GLDLanded on the 80 monthly. I almost cannot believe it. Now, 2 big days of 2-3 times the average daily volume. Could be a blow off in the works.
USO (US Oil Fund)34.63 is the low of the island top-if that clears and holds, perhaps this bull run is really for real
OIH (Oil Services)Until this closes a month out over 43.80, not really all that interesting to me
XOP (Oil and Gas Exploration) Inside day and closed red-aside here for now
TBT (Ultrashort Lehman 20+ Year Treasuries) 2 day fairly significant correction, but over today’s high, could resurrect.
UUP (Dollar Bull) Confirmed bullish phase. Should hold the 50 DMA now
SGG (Sugar) Stop lowered just a bit to 58.89 on our ½ position
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
**NOTE: On Friday’s we tend to stick with the weekly picks that could still set up and add a pick only if we see a good risk/reward potential
Category 1: (Aloha) N/A
Category 2: (Pipeline)N/A
Category 3: (Double Up) Positive Phase, Condition 1 through 4, Positive Pivots which means caneither 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)
LNC Right at the highs, needs one more push in the way of a breakout
GCI Got the opening range reversal and added a little to the long with a new stop under S2. But, really like to see this clear 25.00 now
CBI Underperformed but holding the 10 DMA. Still like especially over 60.00
MET Clearing the 80 monthly. Over 46.14 new highs
MBI Confirmed bullish phase and still has positive pivots. Playing it out til breaks under 13.00
FDX filled the gap today to 99.26. (Note this was another slingshot pattern from Tuesday along with CRM WMT OSK-a great pattern to study). Now, if gap low holds, still see possible upside.
Category 4: (Rip Tide) N/A
Phase Change:
CRM Nearly 1.5 ATRs from entry-which I will take and leave a tail in case this clears 39.00. Then, onto 41.00
LNKD Confirmed bullish. Like a reversal or breakout, risk to today’s low
Shorts: Even though the market seems vulnerable, the stocks that have been already beaten up have really oversold RSIs on the weekly charts and are more setup for max, a daytrade.
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
SLB Inside day. Still hasn’t convincingly broke S1. If does, should see more weakness. Stop now over today’s Wednesday’s high
CTRX Bearish Engulfing pattern. 51.10 swing risk but for day to miniswing use R1
WLL Under 44.56 should see lower prices with risk 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
CHRW A white cap. A good setup under S1. With risk to today’s high
TIF 3 days up but closed weak. Under S1 and today’s low line up with a target of 67.00 and a risk to 73.50
Bye for Now!
