A Super Power With A Third World Grid
Seems like every day, someone in my Economic Modern Family gives us a fright. A mischievous bunch are they!
Tuesday, that distinction went to Semiconductors, who after making new highs on Monday, closed on the intraday lows Tuesday, hence leaving a possible topping reversal candle.
The rest though, pulled their weight or towed the minivan-however you wish to play with the allegory. The Russell 2000 closed green and confirmed the bullish phase, although I would have preferred to see a close over 124.90.
Grandma Retail must have borrowed some cash from the Regional Bank sector as Retail defended the May 6th low, the day it made a reversal. This reversal however, has been meager as it struggles to take out the 50 DMA on every rally since then.
Regional Banks had a strong day, but we already know that it loves the idea of the Federal Reserve raising rates, probably more than most.
Biotechnology traded sideways, seemingly resting. I will note though, that the top from mid-March looms over the group like a tower of doom and will remain as such until Biotechnology clears and closes over 363.50.
Transportation if clears 152, will most likely help the whole market let alone the family, as that was a key breakdown point and also the point that will return this instrument back over a weekly moving average.
The traffic cop or Shepherd continues to look like the Federal Reserve-now try to imagine Janet Yellen in either of those costumes. With the US dollar down significantly and the Interest Rates firming, she directed the Family make a right, blew her whistle for Emerging Markets and Commodities to advance forward, and put her hand up to stop the other 3 indices from crossing at all.
And that’s just a semblance of control of the traffic flow. Where does that leave the rest of the herd?
Since the normal function of traffic lights requires sophisticated control and coordination to ensure that traffic moves as smoothly and safely as possible and that pedestrians are protected when they cross the roads, that leaves the herd huddled on the sidewalk, hoping that the traffic controller doesn’t shut down the whole grid system.
S&P 500 (SPY) Again failed to clear the fast moving average. 212.23 now resistance to clear and 209.92 the 50 DMA to hold. Subscribers: Negative Pivots in all except IWM
Russell 2000 (IWM) Confirmed Bullish phase. 204 back to closest pivotal support to hold.
Dow (DIA) 180 pivotal with 179 support and over 181.50 better
Nasdaq (QQQ) Double top possible at 111.08-16 and support to hold now at 108
XLF (Financials) 24.42 support at the 50 DMA with 24.90 the point to clear
KRE (Regional Banks) We’ve learned not to get too excited when this close to making new highs, but at least we are not too nervous
SMH (Semiconductors) Possible topping candle if confirms under Tuesday’s lows
IBB (Biotechnology) Doji candle day-paused
XRT (Retail) Over 99.55 will look better, under 97.00 trouble
IYR (Real Estate) Inside day. Definitely waiting for the Fed.
GLD (Gold Trust) Inside day. Over 115 better if holds 114
USO (US Oil Fund) 20.50 should hold but 20.00 is where the real support is. Over 21.00 will be even more interesting
TAN (Guggenheim Solar Energy) I’m thinking this has bottomed but will need confirmation on that
TLT (iShares 20+ Year Treasuries) Its mirror image TBT is back over the 200 DMA and looking stronger
UUP (Dollar Bull) 25.10 is a key area to hold before anyone gets too bearish
CORN (Corn) A clean reversal off the lows-been here before but worth watching
DBC (DB Commodity Index) Like this now and especially if holds over 17.50
SGG (Sugar) Trying to bottom
JO (Coffee) Subscribers: Confirmed island bottom. Like over 23 with risk to under recent lows
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 2, Intermediate-Term Positive 5, and Long-Term Positive 9. NOTE: Market Tone is updated before the open each day and reported to you on twitter.
Category 1: N/A
Category 2: N/A
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)
CRM Inside day. If holds 72.85 good risk as pivots neutral. Needs to clear 73.50. Miniswing best. Any OR
BKD 2 Inside days. If holds 37.45, max risk, like for a mini to hybrid swing over 37.89 R1. 5 or 30 minute OR
GD Needs to clears R1 141.64 looks good with support at 139.10 Mini to swing OR-Any
Category 4:N/A
Phase Change:
PEP Over R1 96.48 would try for a swing with risk to 95.37 today’s lows. 5 or 30 minute OR
PX Risk is 121.15 and has to clear R1 122.92 to see if can continue up after reversal pattern. 5 or 30 minute OR Swing
SODA Probably prefer an ORR but do like the risk to 20.50 the 50 DMA and over 21.50 seems poised to tackle the 200 DMA and beyond Swing. Any OR
Reversal Trades: (Glass or Brick Wall Bottom or Top):
CSIQ Possible reversal candle if confirms over R1 32.95 and close there with risk 30.67. Swing and 5 or 30 min OR
EWG (Germany) If clears 29.50 and closes up there then could see a good reversal swing trade risk under the 200 DMA. Then it would need to clear 30.00 to see a target of around 32. Any OR
Shorts:
Category 5: N/A
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 low
JBLU Not really a Cat 6 but after the reversal top and an inside day, worth watching for a miniswing under S1 and the 50 DMA with a stop over the high of the day. Has to be a 5 or 30 minute OR
Best Best wishes for your trading,
Michele Schneider
