Storm clouds forming now in Northern New Mexico. A thunderstorm in this case would be a welcomed relief to the fires that have been raging. Perhaps the now oversold conditions on the McClellan Oscillators will provide some welcomed relief for the fire raging in the Dow. However, with a drought of good economic numbers lately, significant issues in Japan and a very quiet Federal Reserve Chairman, like the summers in New Mexico, would anticipate more not less flare ups going forward.
I look for reversal patterns (like the one we wrote about on May 22nd from the highs). There are several patterns that qualify. That’s what we are waiting for.
S&P 500 (SPY) Broke 162.66 and the 50 DMA is in viewing distance. Today held the low of the runaway gap-maybe that’s the relief for now-maybe Subscribers: Negative Pivots in all indexes
Russell 2000 (IWM) Closed under the 96.50 level but marginally, which means if there is any chance of a rally, even if it’s short-lived, a move back over this level would be one sign. Otherwise, the 50 DMA is next.
Dow (DIA) Similar to SPY, close to the 50 DMA-real close.
NASDAQ 100 (QQQ) 71.91 is the gap low the day we saw the beginning of the runaway gap. But, 71.00 is the 50 DMA and return to the channel breakout area.
ETFs:
GLD 137 resistance and 134 support with a nearly impossible read on the technicals other than the bear phase. I will say that a close up only slightly makes me think this is still quite vulnerable.
XLF (Financials) Failed 19.50. Now pivotal to cross or the 50 DMA is next
IBB (Biotechnology) Why the 50 DMA is not always the line in the sand, even if it’s the first time it’s been under in 2013.
SMH (Semiconductors) Well, we prepped for the possible reversal Tuesday afternoon by selling our INTC long early today. Now, 38.00 is not as important as the monthly chart channel that cleared last month after 12 years of basing action.
XRT (Retail) It seems that this sector is a real key to how the market does at the end of this quarter into the next one. Right now, heavy
IYT (Transportation) More proof that the 50 DMA can be a wall of support or a barrier. Really close to some support levels. For now, momentum is down so no reason to rush in.
IYR (Real Estate) Held the 200 DMA and the very first place we will look for a reversal pattern to go long. Subscribers: Stay tuned for videos and tweets about what that will look like
USO (US Oil Fund) 33.60 is key resistance which if clears is technically a reason to think buy.
OIH (Oil Services) Right on the 50 DMA and under the runaway gap low.
TBT (Ultrashort Lehman 20+ Year Treasuries) The reversal candle from 5/31 has now confirmed. 66.00 is last area of support to watch for.
XHB (Homebuilders) Confirmed warning phase.
UUP (Dollar Bull) Subscribers: A move through 22.55 will get me long 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
**NOTE: Now, we have to watch for reversal patterns like slingshot or glass bottom lows, head fakes on phase changes from good to worse back to good again, or ones that are outperforming. Furthermore, we now look to buy strength rather than anticipate by buying weakness.
Category 1: (Aloha)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:
AFL If holds today’s low, R1 and today’s high line up with the 10 DMA
NTAP Over today’s high the only way I would consider a long now if 37.00 holds
KORS Inside day and has to hold 60.86 and take out 62.65 which clears the 10 DMA as well. Held up ok today
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)
AMZN The 50 DMA 262.95 max risk. And needs another trip and close over 270
Category 4: (Rip Tide) N/A
Phase Change:
DLR Glass bottom possible and it also crossed back above the 200 weekly moving average. Ideally today’s low is max risk but can also look at 59.50
Shorts:
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
DE Unconfirmed distribution phase, but now, 87.00 overhead resistance
GPOR Today’s high max risk with now what looks like a possible move down to 44.00 next
AAPL 451 is max risk and with a negative sloping 50 DMA underneath, could be setting up to test that level again or lower
Category 6: White Cap- N/A
