When one watches as many instruments as I do, on choppy end of month-end of week days such as the one we saw last Friday, one can go a bit mad analyzing the divergences and reason on why this one and not that one!
And that applies to both longs and shorts! For example, why were the Financials strong and the Regional Banks weak? Why did Wal-Mart (WMT) rally and Kohl’s (KSS) sell off?
Why did the Dow (new high close) and S&P 500 make yet another new high while the small caps crept back beneath the 50 DMA? Ok, we sort of know that answer as the small caps have been aptly named this year as such-small.
The basic answer I and many other traders give as we shrug our shoulders is, “Rotation. Rotation, Rotation.”But maybe we are better off saying, “Location, Location, Location” as in its where your money sits with explicit rules and reasons why you put it there followed by a little bit of luck when those reasons pan out toboost your portfolio.
Be that as it may, here’s where I am looking for next week’s version of musical chairs. The Russell 2000s have to sit right here and really, go no further south side. Semiconductors need to clear the 2014 highs once and for all. Retail, which made a good comeback, has to stay over the moving averages and clear 84.00. Financialsand particularly the Regional Banks, need to continue to firm. And SPY and DIA can take a rest-would do them good!
S&P 500 (SPY) Day 4 of the breakaway gap, Nice-now take a break! Subscribers: Positive Pivots in SPY DIA QQQ and negative in IWM
Russell 2000 (IWM) Unconfirmed warning phase-has to stick over the 50 DMA once and for all or signs of trouble. However, it did hold the gap from the week prior and last week’s good start.
Dow (DIA) New high close but not through 167.29
Nasdaq (QQQ) New highs then a doji day close-looks good and one we can stick with
XLF (Financials) Over 22.32 looks a lot better
SMH (Semiconductors) 46.59 the high of 2014 to clear
IYT (Transportation) 2 shooting stars-could there be more???
IBB (Biotechnology)b
XRT (Retail) Unconfirmed Accumulation phase which has to stick
IYR (Real Estate) New high close
ITB (US Home Construction) Looks nothing like IYR therefore want to see this do something as well
GLD The gap lower last Monday sure set the tone after 1 & ½ months of consolidation-textbook pattern to look at
USO (US Oil Fund) not as strong but not weak either
OIH (Oil Services) Another new 2014 highs
XLE (Energy) Still looks really good after an inside day Friday
XOP (Oil and Gas Exploration) Inside day
TBT (Ultrashort Lehman 20+ Year Treasuries) TLTs Maybe a reversal from new highs, we have seen this before but not for very long-here goes my “Boy Who Cried Wolf” Theory-one day!! Subscribers: 115.19 the new risk if shorting TLTs-if we go back in will take tighter risks until we get it perfect
KRE (Regional Banks) If this clears the 200 DMA, could see some nice catching up
CORN (Corn) Subscribers: Got back to 31.50 which is calendar range support-if holds around here might re enter
BAL (Cotton) Subscribers:
JO (Coffee) Subscribers: Confirmed the slingshot low-Needs now to clear 36.00
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:
GOOG Flagging and good for a minisiwng trade over R1 56246 if te ½ to ¾ ATR lines up as risk
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:
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)
REGN If Biotech holds, look here for a risk to 300 or so and move over 309.15 R1
ATI if holds 39.88 the 50 DMA then could see journey up especially since clearing a weekly moving average and had an inside day
OI Already long but good add after an inside day over 33.25
BXP Big move Friday-now like for a miniswing trade over 121.05 if ½ to ¾ ATR risk lines up
VZ Here is a miniswing trade after Friday’s lesson if clears 50.01 and can see a risk no more than1/2-3/4 ATR
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:
Phase Change:
CAM Great compression right over the 50 DMA-like for a swing if clears 64.20 and holds 63.26
SWI Like this one a lot over R1 and Friday’s high for a hybrid
GT Inside day over the 50 DMA mx risk 25.38 and over 26.65 could go to 29 or better
AMZN Over 315.57 or R1 like ten the 50 DMA is 318.18 to clear. Risk under 306.51
WMT We looked at this a while ago and now, cleared the 200 DMA after a slingshot low-like on an ORR against the 200 DMA
STT If Regional banks get going like this over the 50 DMA or 65.81 with risk to 64.40 or so
Open Positions:
BZH 19.28 is the 65 weekly moving average would like to see this defend
GS Like to see this defend Friday’s lows or we are gone
Shorts:
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
LNKD Broke S1 but since it was Friday decided to wait for a new setup Monday and a risk to 165.32 the 50 DMA
MYGN Consolidating under the 10 DMA like for a Miniswng trade risk if lines up ½ t0 ¾ AYTR if breaks 32.99
CAT Broke the 50 DMA now 103.54 best risk and has to break 101.50
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
Bye For Now!
