If you followed the rotation as I pointed out the day before each one happened, you not only had a profitable week-you reduced your stress level and more importantly, sighed relief that a market that has been dubbed as “Rigged” still has some transparency left in it for those who can read the tea leaves.
We began last week, expecting the rotation first to the Financials. Then, the Regional Banks, followed byBiotechnology, Retail ending with Homebuilders and Metal Mining on Friday.
The small caps (also relatively transparent) made its move as well. What illuminated these moves and kept us one step ahead all week? Simple: The breakaway gap that began 9 trading sessions ago in S&P 500.Traders wait a lifetime for technical signals like that. Then, as I firmly believe technical patterns precede fundamentals, Draghi came out waving his magic wand.
What’s up for this week? Ownership of equities (or market participation) has dropped to an over 50-year low indicating a profound mistrust of stocks. What does that mean? Herd mentality. When those absentee investors come in to buy, buy, buy, we shall see the predicted 220 price target in SPY and the blow off. Most likely, just in time for midterm elections.
S&P 500 (SPY) Day 9 and counting of the breakaway gap with yet another gap on Friday Subscribers: Positive Pivots in all
Russell 2000 (IWM) Gapped higher and closed well. Like to see Friday’s low hold and a move to 118 next
Dow (DIA) Breakaway gap here now-my my!
Nasdaq (QQQ) 97.00 target here
XLF (Financials) First rotation here last Monday with a fabulous week thereafter
KRE (Regional Banks) Second Rotation here and also fabulous week with 40.30 next point to clear
SMH (Semiconductors) Guess what? Breakaway gap here in my favorite sector of 2014!
IYT (Transportation) Told you it looked ready for another leg up
IBB (Biotechnology) Inside day and therefore, good place to look on Monday
XRT (Retail) Fourth rotation here happened last week
IYR (Real Estate) Maybe a reversal after a spectacular move-regardless, it did its job!
ITB (US Home Construction) Fifth Rotation call out and a nice breakaway from 2 weeks of consolidation
GLD Not exciting but not going south until rates firm
XME (S&P Metals & Mining) Subscribers: Unconfirmed accumulation phase
OIH (Oil Services) New highs
XLE (Energy) New highs on a breakaway gap.
XOP (Oil and Gas Exploration) Started breaking through 78 and now has to have follow through
FCG (First Trust ISE Reserve NatGas) 22.30 support with another good looking chart if clears 2-14 highs
TBT (Ultrashort Lehman 20+ Year Treasuries) TLTs That looks like the correction with TBTs back in focus on Monday
PHO (Power Shares Water Resources) Water running upstream
EEM (Emerging Markets) Breakaway gap there too
IFN (India Fund Inc.) Parabolic mode
EWP (Spain) Subscribers: Breakaway gap
FXI (China Large Cap Fund) 37.50 point to clear
CORN (Corn) Subscribers: Potential brick wall bottom if confirms over 31.75
SGG (Sugar) Subscribers: Potential brick wall bottom if confirms-live over 54.60 on a closing basis (3 levels of position-1/4 over 54.60, more over the 50 DMA and mover over the 200 DMA)
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: We began 2014 up 38% in the Model Portfolio and rose to about 47% thereafter. Subsequently, the equity dropped (including open positions) to around 45%. This week, with open positions we are back at 48% or up 10% this year. The market is up 5% to date. Your homework-review the video about learning from losses I made last week-lots to be learned there!
Category 1: (Aloha) N/A
Category 2: (Pipeline) N/A
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)
PEP Tried on Friday, now a good focus over R1 88.15 if starts off strong
TSRA New close high since April with22.23 support and above move over 22.57 good for a swing
PM Started on Friday now has to clear 88.80 and hold a dollar lower
HOG Like now against 71.50 for a move up to new highs or around 74
REGN Consolidating and over 313 with risk to 10 DMA 307.55
CTRP Big eyes here Monday with 58.00 the trigger for a miniswing
TSLA If Friday low holds, then like for a move especially if clears Friday’s high
LEN ORR only
XOM ORR only
GOOG Cleared the 10 DMA without a lot of gusto. Now, 555.40 area good risk to trade off of
Category 4: (Rip Tide) N/A
Phase Change:
KSS 54.76 and above only way to get in now
WMT 77.45 is the point to clear
P Pushing up against the 50 DMA 25.87 an dif clears back in play
Shorts:
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
MOS Inside day which means cannot clear 49.13 and break S1
POT Inside day so keep watching
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
VLO Unconfirmed warning phase. Will confirm if stays below 55.32 and breaks S1
Bye For Now!
