If you are thinking the word “resiliency” then you are on the same page as the market. The Russell 2000s held the 200 DMA after beginning the session with convincing weakness; however, they have stayed firmly in awarning phase. NASDAQ, SPY and the Dow, all had inside days (when the trading range of the day is inside the trading day of the day prior) near the highs-the “rest”.
If you are thinking the words, “Rates Firming” then you might be on the same page as the market, although I was pretty convinced the low was in when TBTs were trading 63.00 a couple of weeks ago. At this point, the rates firmed into a channel on the charts and now have to stick around here consolidating for real confirmationthat logic has returned.
What do firmer rates lead to? Exactly what we have seen the last couple of days-better moves in the banks,financial sectors, retail-although still has resistance to clear, and US Manufacturing. Semiconductors started this ball rolling 2 weeks ago.
Next rotation then to watch for is exactly those-Retail and Manufacturing with Homebuilders still a contender.
Finally, Biotech should also firm again as the consolidation pattern on the charts remain noteworthy.
And there we have it-the small caps are spooking the market but if they firm once and for all-220 in SPY!
S&P 500 (SPY) Day 6 of the breakaway gap with the prescribed rest. Subscribers: Positive Pivots in SPY QQQ Negative in IWM DIA
Russell 2000 (IWM) Another day of holding the 200 DMA but now, unless this clears 112.65 area, the 50 DMA, market will remain tentative
Dow (DIA) Took a rest
Nasdaq (QQQ) 4 days of consolidation with an inside day near the highs
XLF (Financials) Looking good
SMH (Semiconductors) Rocket job!
IYT (Transportation) Looking a bit toppy now-but did what it needed to do to help get the market here
IBB (Biotechnology) Looks ready after a lot of consolidation. Subscribers: Focus here over R1 and todays’ high
XRT (Retail) Incredible compression around converging moving averages.
IYR (Real Estate) Rest day
ITB (US Home Construction) More consolidation which I like if holds 23.75 level
GLD Possible reversal from the lows
XLE (Energy) Look here too
XOP (Oil and Gas Exploration) Good correction now if holds Tuesday lows Subscribers: Over R1 makes this a category 1 type trade
TBT (Ultrashort Lehman 20+ Year Treasuries) TLTs down a lot now so perhaps some bounce here tomorrow with the 50 DMA so close
UUP (Dollar Bull) Still basing out
KRE (Regional Banks) Now have to watch the 50 DMA
EWP (Spain) Subscribers: Still watching
JO (Coffee) Subscribers: Clearly not ready to go back up
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:
MS Has to hold todays low and clear R1 at 31.01
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:
GOOG Dropped to the 50 DMA so now, if good should hold today’s low and clear 551
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)
WSM Can continue if clears today’s high and holds todays low
ACT Over R1 clears highs since beginning of March for a hybrid trade
CMI 6 days of compression which will clear over 154.25 with risk 151 area
EQT 2 Inside days means risk to todays low and move over R1 for miniswing
Category 4: (Rip Tide) N/A
Phase Change:
SWI Like this one over R1 and today’s high for a hybrid
GT Inside day and good over 26.65
TEX Confirmed brick wall at the 200 DMA has to hold 38.34
STT Unconfirmed phase change to bullish if holds the 50 DMA
GS Like on an ORR but also over 162 with a new risk of 160
WMT back over 200 DMA which if today’s low holds, could see a move to78 to fill the gap
THO thin stock but watching to see it over the 50 DMA or 60.74
SLW Slingshot low and if metals, like this one
Open Positions:
LVS Unfortunate with the news, but could hold now and start the journey back up with our now ½ position
TXT 5 days of consolidation which if it clears 39.50 keeps our stop at today”s low
OI Already long but good add over 33.50
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
MOS under the 50 DMA at 49.12 now good risk to see a move down to 45 or lower
SCTY If cannot clear today’s high look at for a day to Miniswng short
EBAY Still looks heavy with risk now 51.13
Bye For Now!
