Let’s examine how the expected “rotation” transpired in the market as this week began using the notes I wrote coming into Monday:
NO-The Russell 2000s have to sit right here and really, go no further south side. (It went further south side and closed under the 50 DMA although held the 200 and 10 DMAs so still hope)
YES-Semiconductors need to clear the 2014 highs once and for all. (They made new highs and closed well, taking a new lead over Energy-which took a rest)
NO-Retail, which made a good comeback, has to stay over the moving averages and clear 84.00. (Although they held the 200 DMA, they have not cleared last week’s high and a significant point of resistance.-yet.)
YES-Financials and particularly the Regional Banks, need to continue to firm. (Nice pop today, even clearing the last week highs in XLF, with the Regional Bank Sector-KRE-clearing the 20 DMA)
SORT OF-And SPY and DIA can take a rest-would do them good! (They both actually made new highs, if you call that a rest)
The Interest Rates also firmed. (Jury still out on rates although many more articles about the case for them going higher appeared on my twitter stream today.)
Homebuilders held the Bullish Phase. (ITB strengthened but has not done much as far as pulling away from recent consolidation above the 50 DMA)
Of course the question remains on whether or not Monday’s “Rotation” is the start of a bigger trend for the sectors that really do translate to a stronger second quarter, or whether the “Rotation” was more of a one day wonder.
S&P 500 (SPY) Day 5 of the breakaway gap and yet another new high Subscribers: Positive Pivots in SPY DIA Negative in IWM QQQ
Russell 2000 (IWM) Confirmed warning phase-which is disappointing but at least held the 10 and 50 DMAs which keeps hope alive
Dow (DIA) Made a new high and closed just beneath it, however, a new high close
Nasdaq (QQQ) 3 days of consolidation near the highs which means a new launch pad or a topping pattern if breaks under 90.00
XLF (Financials) Here is where some of the rotation happened today. 22.00 now major support
SMH (Semiconductors) Cleared and closed on new 2014 highs
IYT (Transportation) New high close again
IBB (Biotechnology) Big eyes here tomorrow after an initial drop then recovery end of day Subscribers: Focus here over R1 and todays’ high
XRT (Retail) Confirmed Accumulation phase but not an impressive close-at some point, we will need this to perform
IYR (Real Estate) New highs
ITB (US Home Construction) More consolidation which I like if holds 23.75 level
XOP (Oil and Gas Exploration) Some money rotating out of this group
TBT (Ultrashort Lehman 20+ Year Treasuries) TLTs had a small gap lower and closed weak-have been here before so patiently waiting to see if the reversal from the highs sticks for more than 2 days
KRE (Regional Banks) Cleared the 200 DMA, over 38.82 good confirmation
CORN (Corn) Subscribers: Slingshot bottom and big focus tomorrow against today’s low
JO (Coffee) Subscribers: Don’t be surprised to see a lower stop tomorrow until it shows it will hold around this 33 level
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 swing trade over R1 561.22 against the 50 DMA
HCA Perfect category 1 if holds the 10 DMA at 52.71 and clears today’s high and R1 which lines up
WSM 66.56 max risk with over R1 the place to clear for a hybrid swing
MS Has to hold todays low and clear R1
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)
TXT 4 days of consolidation which if it clears 39.43 gives a great risk to today’s low
RCL Inside day and a good Miniswng type trade if the risk lines up
OI Already long but good add over 33.50
BXP Lets look for an ORR since this is thin
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:
SPWR Has to clear R1 and today’s high and hold 31.65
SWI Like this one a lot over R1 and today’s high for a hybrid
GT Like over 26.65 with risk now to 25.55
AMZN Keeping it here in case market firms and this clears R1
STT 5 days of consolidation under the 50 DMA- follow a move above it or 65.75
CBS Converging moving averages if holds todays low with positive pivots
GS Great comeback with R1 at 16084 for this time, a full size position swing
DDD Cleared the 50 DMA today and now, has to hold around 50 and clear 52.26 after an inside day
Open Positions:
LVS Cleared the 50 DMA and has to stay over 76 and confirm the bull phase
BZH Need this to take out 20
Shorts:
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
LNKD Still watching for a short if the market is weak
SCTY If cannot clear today’s high look at for a day to Miniswng short
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!
