While I was recovering from a stomach virus, I thought a lot about the market, modern families and sheep. After all, watching Netflix in bed on my iPad is entertaining only for a short period of time!
First off, I like to thank my family-Jonathan Griffin and Keith Schneider for allowing me to recover with no stress!
In keeping with last week’s theme on the Economic Modern Family and checking into the top index and sectors, the Russell 2000s (IWM) have yet to take out 123.78 March 2nd high, but are very close. The Retail Sector (XRT), made new highs on Tuesday, not surprising. Regional Banks (KRE) are resting for now, but look well poised should it hold 40.80 area. The Semiconductors (SMH) are struggling with its own version of a stomach virus, but seems ready to pitch in again if it has to. Biotechnology (IBB) figured since there is no vacation in sight, it might as well continue to lead the charge. And Transportation (IYT), cleared 162 handily with the January Calendar Ranges just within reach.
Circling back to sheep and pastures, we are now exactly one month since the Chinese New Year of the Sheep/Ram/Goat began. Subsequently, the market has traded remarkably like the image I can’t shake from my brain.
Sheep pastures. If the sheep expand their pasture, they won’t trot away. They stay in a herd. Likewise, rallies should continue to look the same-room to upside, but with a collective consciousness or in other words, nothing too wild (certainly not like a galloping horse) and with most instruments working in tandem. Furthermore, once free from their comfortable confines (trading ranges), ready to retreat on a moment’s notice whenever anxiety sets in. Buying strength in that environment, makes longs more vulnerable.
If the pasture fences break down or the market hits the bottom of the range and fails, the risk is for a sheep massacre. Not all sheep will go down, of course; but certainly, it’s a nasty visual to conjure up.
Therefore, if you combine the images of family and the sheep together-you have a plausible trading plan for the time being. Buy dips that are orderly with tight stops in case of a massacre. Stay the course or look for shorter term trades when the sheep and family are grazing (up days) and get ready to take profits once the boundaries widen above the range assuming, rallies can be shorter lived!
S&P 500 (SPY) Confirmed Bullish phase, Inside day ahead of the FOMC. Subscribers: Positive Pivots QQQs IWMs Negative in SPY DIA
Russell 2000 (IWM) Unless breaks 122 looks ready to clear to new highs.
Dow (DIA) confirmed bullish phase marginally as the low tested the 50 DMA thereby has to hold Wednesday.
Nasdaq (QQQ) Bull phase, significant overhead at 108, support at 104.67 but rally, 106 has to hold for now.
XLF (Financials) we need to see this clear 24.90 to really be in gear!
KRE (Regional Banks) Tight trading range with a potential setup for an explosive move to the upside.
SMH (Semiconductors) Needs to get back over 56.45
IYT (Transportation) Good digestion of Monday’s move over 162 now support
IBB (Biotechnology) Parabolic move continues!
XRT (Retail) Cleared 99.75 and now new all-time high closes.
IYR (Real Estate) Inside day
GLD (Gold Trust) Interesting first 30 minute candle and now perhaps an inverted hammer candle on new recent lows
USO (US Oil Fund) Oversold after huge volume down-possible its trying to bottom but let it tell you it has
OIH (Oil Services) Triple bottoms at 31.50 that has to hold now
XLE (Energy) Inside day after the rally on Monday
UNG (US NatGas Fund) Cleared the 50 DMA but has to confirm
TAN (Guggenheim Solar Energy) 43.00 now support want to buy against
TBT (Ultrashort Lehman 20+ Year Treasuries) All going to be about the FED
EWW (Mexico) Subscribers: After last week’s glass bottom low, holding up well over the 10 DMA
EWY (South Korea) Gapped over 3 moving averages on a setup I really like
RSX (Russia) Putin’s back and so is this over the 50 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
Category 1:N/A
Category 2: N/A
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)
KSS Negative pivots but keeping it on list with room over 75.00 if holds 74.00, best for an ORR or BO over 75 for a day to mini
FB 80.00-80.30 resistance to clear then if can risk to 78.34 good for a mini to hybrid swing
WFC Looks like new highs but have to wait until after the FED meeting and the dust to settle before entering
AFL Slightly negative pivots but with an inside day. Like over 63 with a hybrid swing risk to under the 10 DMA 62.22
ADSK Inside day and good over 61.64 risk to 60.68 area
AMPE 2 Inside days so worth watching for a day to miniswing max
Category 4:N/A
Phase Change:
BAX 67.75 now max risk if sets up over 68.92 for swing
SPWR 32.05 max risk now and still consolidating-like over 33.00
SODA has to clear 18.69 the 50 DMA then have a good bottoming formation potentially with closer risk 17.82
BBRY Since still bullish on the fundamentals, over 9.90 have a new lower risk trade to recent lows 9.50
Shorts:
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
GOOG 2 IDs and an either or situation. Over todays high and R1 like the long. Under today’s low and S1 like the short-so either way, worth watching
MON 118 good risk point and still set up for a short since not oversold
GILD Has negative pivots and 101.10 now close resistance-has to break 98.90 ultimately, but would short with the tight risk ahead of that
Category 6:N/A
Best Best wishes for your trading,
Michele Schneider
