Longs:
As per last week’s relatively mild and flat price action in the 4 indices, what started out for me as a fun and poetic way to describe the market using the Chinese Zodiac’s Year of The Goat/Sheep/Ram (In Chinese, the word means all three), wound up becoming more of a fascination once I began to drill down.
Although the origination is hard to pinpoint exactly, records show that since theHan Dynasty 206 BC-220 AD, the 12 Earthly Branches have been used to record the time of day. However, for the sake of entertainment and convenience, they were replaced by the 12 animals. In Buddhism, legend has it that Buddha summoned all of the animals of the earth to come before him before his departure from this earth, but only 12 animals actually came to bid him farewell. To reward the animals who came to him, he named a year after each of them. In modern times, the Chinese Zodiac remains popular in several East Asian countries including China, Vietnam, Korea and Japan.
Adding up the total population of those 4 countries based on the 2013 consensus, we are talking about over 1.624 billion people! And that does not include people of Asian ancestry who have emigrated to other countries.
So, think about it. 1.6 billion + People who share in a belief that is around 2300 years old. Who am I to argue with that?
Seriously though, if one believes that collective consciousness moves energy, then if nothing else, one must at least respect the self-fulfilling possibilities. After all, it worked incredibly well last year with the horse.
Looking at commodities, the 4 I focused on last week: The Commodity Index (DBC), Oil, (USO), Gold (GLS) and Silver (SLV) all closed up for the week except for USO. None had the volume to suggest, however, that “smart” money came in to buy.
Therefore, for this coming week, look for continuation to the upside in the commodities only without a big commitment until we see volume. Furthermore, expect the indices to continue their grazing, scattering and grazing pattern until “fresh” news emerges. (Read below for signs to watch for)
S&P 500 (SPY) A gentle step down to support at the 10 DMA and S1 at 210.35Subscribers: Negative Pivots in all
Russell 2000 (IWM) Possible reversal candle with light volume so unless it opens and closes weak, assume just a minor correction
Dow (DIA) Also a possible reversal candle especially if breaks 180.85
Nasdaq (QQQ) Inside and no real reversal pattern therefore, eyes here to lead which will help the other 3.
XLF (Financials) Continues to elude 24.90 the January Calendar Range high to clear, and basically in a range between 24.50 and 24.15
KRE (Regional Banks) 41.06 the January Calendar Range High to clear which is getting a bit old as we get into March but rules states good until June
SMH (Semiconductors) Consolidating
IYT (Transportation) We can say for now it failed the 165.17 January high Calendar range
IBB (Biotechnology) Muscle man went spinning instead of pumping
XRT (Retail) Look here and we surely make a case for more upside
IYR (Real Estate) Finding some support
ITB (US Home Construction) Found support on Friday near the fast moving average. Look's ok!
GLD (Gold Trust) Noise unless it clears 116.90 convincingly SLV more interesting if clears 16.05
GDX (Gold Miners) Nice move but with light volume
USO (US Oil Fund) Inside day with 18.00 pivotal
TAN (Guggenheim Solar Energy) Did not get a weekly close over 39.60, but was a great monthly close
TBT (Ultrashort Lehman 20+ Year Treasuries) TLTs 128 key support and can still get up to 132
UUP (Dollar Bull) In a channel but at the top of it
EEM (Emerging Markets) Has to clear 41
EWG (Germany) Like as it long as it holds 29.50
FXI (China Large Cap Fund) long term bullish
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)
BKD Finally went up so now let’s look for an ORR rather than chase strength. Long term very bullish
EMC Consolidating over 29.00 with risk to 28.40-a 2015 pick
TOL Over 38.50 with a tight risk to 37.74, like it to see if it can clear 40 and keep going
SFM Like if holds 36.50 and long term still very bullish thinking through 40 can see 45.00
Category 4:N/A
Phase Change:
DDD Inside day. Therefore, using the bar from 2/26 as a range, will look to buy above and have stop below.
SPWR Would only add the other ½ on an ORR
AFL 61.95 now should hold with 62.25 pivotal
TEX 2 Inside days over the 100 DMA. 28.05 has to clear now with risk 26.65
Shorts: Focus List: BIDU CBS (Under 58.80) BITA
Category 5: N/A
Category 6: N/A
Best Best wishes for your trading,
Michele Schneider
BKD
EMC
TOL
SFM
DDD
SPWR
AFL
TEX
SLB
WFM
CCL
FDX
PX
HCP
Shorts:
BIDU
BITA
CBS
