Well, Clarice, Have The Lambs Stopped Screaming?
Silence of the Lambs
Keeping the Year of the Sheep metaphor as representative of the 2015 Trading Range consistent, even with the bloodbath, one third of our Economic Modern Family remain in bullish phases, while two marginally flirt with the 50 Daily Moving Average and 2 are in rough shape.
Beginning with Granddad Russell 2000 Grandma Retail, they both broke the 50 DMA, but not by that much as if to relay to the marketplace, “I feel the pressure, yet keeping that bullish phase within reach just in case.”
Regional Banks and Biotechnology did not perform well, however, both are also keeping the 50 DMA in their rearview mirror thus far, hence persist in bullish phases.
Semiconductors took the express to the 200 DMA, which as a point of support is substantial if this is to keep out of the slaughterhouse in the way that Transportation could not.
Speaking of Trannies, best hope now is the longer term monthly moving average to hold. Furthermore, as grossly oversold, we look for signs of a bottom most classically through reversal patterns and volume spikes.
A letter I received recently mentioned that my using Cousin Eddie from National Lampoon’s vacation as a way to describe Greece (GREK), helped her internalize the notion that not only does every family have a Cousin Eddie, but apparently, so does the world. Indeed.
The Volatility Index (Index of Fear) currently indicates the lambs have yet to stop screaming, (first time since February that index closed above its 50 DMA).
However, if we look for yet another example of art imitating life, we might find a similar resolution to the end of this sell-off the same way Hannibal Lecter presumed the screaming of the lambs ceased for Clarice-finding herself in the dark, overcoming her fear, pointing her gun towards the sound of the killer, thereby, shooting him dead.
S&P 500 (SPY) Hit the 200 DMA and managed to hold it on the close. Oversold, huge volume-a blow off bottom in the works? Subscribers: Negative pivots in all
Russell 2000 (IWM) Close to double the average daily volume, hit the 100 DMA. 124 big support over 124.84 otherwise could see a trip to 120.50
Dow (DIA) Huge volume as this enters an unconfirmed distribution phase and hits the bottom of the 2015 range
Nasdaq (QQQ) After the four tops-gloom and doom. Only now, nearing support, oversold with huge blow off type volume
XLF (Financials) 24.15 support
KRE (Regional Banks) 44.00 area support then 42 and back over 45 a much better scenario
SMH (Semiconductors) Huge volume as this enters an unconfirmed distribution phase and hits the bottom of the 2015 range
IYT (Transportation) Lamb chops
IBB (Biotechnology) Landed on the 50 DMA so a good place to go should the market stabilize.
IYR (Real Estate) Just about to major monthly chart support
XHB (US HomeBuilders) Still bullish
GLD (Gold Trust) Not really noteworthy action even with the green day
USO (US Oil Fund) Noisy until it clears 21.50 or fails 19.00
UNG (US NatGas Fund) Like over 13.67
TAN (Guggenheim Solar Energy) Big volume, broke the 200 DMA and into February levels of support
TLT (iShares 20+ Year Treasuries) Possible reversal with good volume-119 has been recent resistance that has to clear
UUP (Dollar Bull) The 50 DMA resistance after holding the 200 DMA support
CORN (Corn) Last time this was over the 200 DMA was April 2014-not there yet
SGG (Sugar) Trying to base again
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 3, Intermediate-Term Negative 3, andLong-Term Positive 1. 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:N/A
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:
*HFC Not a true 2 since only 1 day under negative pivots but like the risk to the 40.50 level and has to clear R1 40.93. Swing
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)
*GERN Good volume and best risk 3.78. Any OR
*HLF 53.00 max risk. Any OR looks good over the 200 weekly moving average is why this is here
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:
CIEN Oversold. The 50 DMA is 23.46. Has to clear 24.10
*FEYE The 50 DMA 46.29 is max risk. Has to clear today’s high and R1 in current market condition
*SINA 52.10 is a decent risk and like this over today’s high and R1.
Phase Change:N/A
Reversal Trades: N/A
Shorts:
Category 5: N/A
Category 6: N/A
Best Best wishes for your trading,
Michele Schneider
