Before we get all celebratory; there are both good and not so good signs in the market as of the close of last week. The bad: Island top in S&P 500 is still there and that index failed to close above the fast moving average. The short bonds (TBTs) did not cross over the 50 DMA confirming a warning phase. The small caps (IWM) ended with an inside day, right on the fast moving average. The Financials (XLF) ended with an inside day under the fast moving average. The good: The small caps (IWM) ended with an inside day, right on the fast moving average. NASDAQ held the 50 DMA and crossed back over the fast moving average. The Dow (DIA) closed best, crossing the fast moving average and not too far from the recent highs. Retail (XRT) returned over the fast moving average as did Real Estate. That makes it tied-4 good 4 bad. And, with this week the start of the Passover holiday, ending with the market closed for Good Friday, it is possible that split decision will remain as such for a while.
S&P 500 (SPY) Through Friday's high will clear the fast moving average. Subs: Pivots positive and last week's low now super important
Russell 2000 (IWM) Follow the range break
Dow (DIA) 145.35 is the recent high and has to hold last week's low
NASDAQ 100 (QQQ) 67.50 (the 50 DMA) is key to hold and 69.00 the area to break above
ETFs:
GLD 154.88 is last week's low which is also a gap from its base. Therefore, if holds, good for gold, bad for market. If fails, the bear phase could resume
XLF (Financials) Inside day, follow the range break
IBB (Biotechnology) Brick wall high in place, but would not count this out as best chance for a comeback if market stabilizes
SMH (Semiconductors) Marginal, unconfirmed bullish phase with some support at 34.50
XRT (Retail) Now, the fast moving average around 70.00 should hold after this doji day
IYT (Transportation) Inside day, under the fast moving average. Market needs this group to come back
IYR (Real Estate) Another area the market needs to stay firm-watch for Friday's low to hold
USO (US Oil Fund) Good move on Friday, but still want to see it show more clear direction
OIH (Oil Services) Has a shot but now looking like a possible bear flag forming
XLE (Energy) Still looking a bit unclear
TBT (Ultrashort Lehman 20+ Year Treasuries) One of the main reasons for concern as this is below the 50 DMA-this and the island top in SPY.
XOP (Oil and Gas Exploration) Support around 60.00 with an inside day to watch
XHB (Homebuilders) Did not confirm the brick wall which is a good sign
*Note to Subs: Geoff will be with you on twitter Monday and Tuesday. I will do the Evening Watch for Wednesday and be back with you then. Monday's list is one of the very rare times when all 6 Categories have picks!
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:
BA 84.00 is now best risk and R1 and Friday high line up
MTW Crossing the 80 monthly this month with Friday's low a good risk. Recent high 21.35 which should take this to another leg up.
BAC Risk to the 10 DMA is just under Friday low. Since this has crossed the 200 weekly moving average, remains of interest
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:
STX Holding the 50 DMA at 34.15 which means a good risk to trade off of if this can take out 35.00
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)
ACT Friday's low is max risk but has to clear R1
V If gaps higher than Friday's high, good 5 minute opening range candidate if risk is inline. If not, then would only buy a reversal against the 50 DMA
SPLK Gave the buy on Friday but now has to clear 39.75, the all-time high for a swing trade
PM Provided Friday low holds, like this for a swing to recent and possibly new highs
SKS Risk Friday low. Like as it attempts to cross the 80 monthly moving average
Category 4: (Rip Tide) Oversold (2 or more days under FTP), Condition 4, Needs to clear R1, Risk previous day low unless noted differently, Target- Day to at least 3 ATRs from entry:
JPM Not oversold, but inside day off the 50 DMA and over R1 lines up with Friday high
MBI If this holds 11.00, might see a pop back up to 12.00. Low risk miniswing trade if can clear R1.
BWA Oversold and on the 50 DMA 75.73 max risk.
Phase Change: INTC Unconfirmed phase to accumulation if the 50 DMA can hold. Overall, friendly to this to the 200 DMA MJN Almost an inside day and can now use Friday low as a risk.
Shorts:
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
MHP Unless this close above the 200 DMA, the bear flag is still in play. Would like to see it break S1
CTRP Narrowest range day in 172 days. Negative pivots but still needs to break Friday low and S1 and not clear 21.00
DLR 66.50 area good risk and looks like could see 63.00 again
NE Inside day which means only short under S1 and Friday low
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
EW Could be classic whitecap if cannot clear 83.60 and fails S1 which lines up with Friday low
Bye for Now!
