I had 2 areas I wanted to see defended as starters. In the small caps it was 118 and in the Dow 163. Both were defended by the end of Wednesday’s session.
NASDAQ closed well with S&P 500 a bit weaker. But, we are not out of the woods. If you are familiar withfloor trader pivots, all indices must now cross R1 to turn the bias back to positive even in the current bull phases.
Otherwise, this was nothing more than a bounce into resistance.
Here is a repeat of the 4 possible scenarios one last time, as I am going on vacation and leaving the helm to Matthew Mullins, Assistant Director of Trading Education and Research and Rock Star of the Daytrading Room!
1) The blow off top pattern is still playing out
2) The market is digesting the recent rally through time rather than price
3) The market is digesting while it works off overbought conditions, and pretty much will continue to be range bound for a while longer
4) The market is not merely digesting, but fueling for a blast off from last Tuesday’s high with much higher levels to come
S&P 500 (SPY) 187.80 reverses the correction while 184 is underlying support Subscribers: Negative pivots in all
Russell 2000 (IWM) 118.95 next hurdle. 115 next stop if cannot clear it
Dow (DIA) 163 remains pivotal, 163.75 to clear and 161.45 support at the 50 DMA
Nasdaq (QQQ) 90.95 to clear, 90.00 pivotal, big drop to 88 the 50 DMA
XLF (Financials) Stopped at 22.00 and closed ok. Over 22.18 looks a lot better
SMH (Semiconductors) They didn’t disappoint and look really strong
IYT (Transportation) Also a really good sector to watch now for more upside
IBB (Biotechnology) Digesting recent correction
XRT (Retail) Clean correction and another favorite group to watch
IYR (Real Estate) Over 68.65 looks a lot better
XHB (Homebuilders) Held the 50 DMA
GLD Gapped up-not quite a runaway, but a bit of a breakaway on new 6 month highs
USO (US Oil Fund) Held the 50 DMA-note the island top mentioned back on 03/04.
XOP (Oil and Gas Exploration) Held the 50 DMA
EEM (Emerging Markets) Subscribers: Held some support today
FXI (China Large Cap Fund) Subscribers: Possible slingshot bottom today if follows through over R1 33.97
CORN (Corn) Subscribers: Now looking at the 200 DMA to clear
BAL (Cotton) Subscribers: Nice candle near the highs
JO (Coffee) Subscribers: Possible top but could have said that many times last couple of months
SGG (Sugar) Subscribers: Held the 200 DMA
****NOTE: I left 6 positions on in the model portfolio with GTC orders and targets. Geoff will be adjusting these every day. Watch for a text, but more reliably, figure that after 30 minutes, he will update everything on the model.
Have a lot of picks because they can be referred to each day while I’m on vacation with Matt watching for entries.
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:
SFUN Classic condition 1 with a move over R1 88.88 good with stop under today’s low
FB If today’s low holds, look for this to take out recent highs and keep going-for a miniswing trade mainly
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)
YUM If can close above 78.30 will be a new all-time high close
HOG Inside day and looks good if clears 68.26 to around 70.50 or so
AA Has to clear 12.38 now to keep going and hold 11.97
SCTY Like more on an ORR against the 50 DMA to control risk.
KSS Not positive pivots but like over R1 against 54.80
Category 4: (Rip Tide)N/A
Phase Change:
GOGO Like over R1 24.66 with risk to today’s low
ASML Converging moving averages with an inside day. Over 91.30 takes out R1
GDX Over 27.00 looks great
LRCX If can clear 53.92 looks even better and now, should hold today’s low as max risk
FDX Looks great over 138.60 against the 50 DMA
AAPL Confirmed the phase change and 565 still reasonable if the 50 DMA holds
HSP Over R1 and the 50 DMA after an inside day, like for a new swing entry stop 41.79
IBM Don’t want to give up on this as if the market firms and this clears the 200 DMA has lots of room
EDU Possible Slingshot low on the 200 DMA-moved up today so look for an ORR best entry
SODA has to hold here and clear 41.66
Shorts:
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
APA If cannot clear 79.70 still a candidate
AGCO under 52.46 S1 with risk to 53.86 the 50 DMA
QCOR If breaks 62.82 good one against the 50 DMA
Bye For Now!
