Antifreeze Not Properly Circulating
The title of Wednesday’s night daily: If One of Those Bottles Should Happen to Fall…
Should have read, If the whole top shelf of those bottles should happen to fall…
The good news: We have been here before (like a lot), where the market looks poised to run only to sell off. Conversely, before we get too bearish, we have been there, done that as well.
Poor Economic Modern Family. Just as they got some traction, the A/C broke down, heating things up, and then arguing ensued, forcing Grandpa Russell 2000 to pull the minivan over.
Grandma Retail, bless her heart, tried hard to keep everyone cheerful. Retail held the 50 DMA and confirmed the bullish phase. The Russell’s held onto its 50 DMA simpatico with Grandma. For support, they looked to their most robust grandson, Regional Banks. After Wednesday’s spectacular run, that sector closed ok, or at least well enough to sate Granddad and Grandma.
We knew Semiconductors were in trouble. They topped out on good volume. Yet, until it breaks the 50 DMA at 56.50, the other family members are allowing that sector to sulk. Big Bro Biotechnology is torn. On the one hand, that sector is holding up well. On the other hand, the sideways action is keeping it from taking any new leadership role.
And that leaves us with guess who-Transportation. The trading range Thursday was inside the trading range from Wednesday. It broke 152 but not in an irreparable way.
The state of the family-hot, bothered, but not ready to disown anyone just yet.
Grandpa Russell checks under the hood and finds out that the gasket blew. Grandma Retail heads to the store to buy coolant. Regional Banks ties a white handkerchief to the rearview mirror. The fate of this road trip hangs in the balance.
S&P 500 (SPY) Sandwiched between the 10 and 50 DMAs Subscribers: Negative Pivots in all
Russell 2000 (IWM) Held the 50 DMA and still very much in the range since Mid-May
Dow (DIA) Held 179 support but in a unconfirmed warning phase now
Nasdaq (QQQ) Double top looking more possible with support to hold at 108
XLF (Financials) 24.90 the point to clear with 24.40 the 50 DMA
KRE (Regional Banks) Digested the move and held up fairly well
SMH (Semiconductors) Giving it leeway to 56.50
IYT (Transportation) 151.80 the pivotal weekly moving average to hold
IBB (Biotechnology) 353.75 the 50 DMA
XRT (Retail) Confirmed the Bullish phase on a down day-impressive
IYR (Real Estate) Holding the May lows-best I can say
GLD (Gold Trust) Holding early May lows and not done yet
USO (US Oil Fund) Touched and held the 50 DMA which means Thursday’s lows important to hold
TAN (Guggenheim Solar Energy) Getting real close to the 200 DMA which will be tempting to buy
TLT (iShares 20+ Year Treasuries) Bounce after the Lagarde comments it seems-also cause it held the 200 week moving average
CORN (Corn) Looks promising
BAL (Cotton) Looks promising
DBC (DB Commodity Index) Needs to clear 18.00 now
SGG (Sugar) Trying to bottom
JO (Coffee) Also looks promising
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 4, Intermediate-Term Positive 2, andLong-Term Positive 8. NOTE: Market Tone is updated before the open each day and reported to you on twitter.
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:
VMC A 2015 pick. Like if holds 86.64 the 50 DMA and clears 89.18 tomorrows R1.
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)
PNRA Like if holds 181.39 and can clear 183.02 on a 5 or 30 minute OR, Risk to 180 area
BABA IF holds 90.09 and sets up over pivots like for a mini to swing trade. May high 95.06 if clears will look very good. 5 or 30 minute OR
Category 4: N/A
Phase Change:
DBA Inside day on the 50 DMA. Like over 22.45 with risk to the recent lows or 21.80 area
SODA Held the 10 DMA at 21.49. Like if can clear 21.94 with risk to 21.50 the 50 DMA
TASR Has support at 30.38 to trade against. Swing good even can risk to the 50 DMA. Like on any OR over 32.06
Reversal Trades: (Glass or Brick Wall Bottom or Top):
SFM held up well on Thursday even with the downward momentum. Like if can clear 29.39 on a 5 or 30 minute OR risk to 28.89
Shorts: Focus List: JBLU, UA
Category 5: N/A
Category 6: N/A
Best Best wishes for your trading,
Michele Schneider
