With regard to the Simpson’s episode from the mid 90’s “Terror at 5 1/5 Feet", I wrote a weekend homage about the similar scenario playing out in the overall market or what we called “Terror at 18,000 in the Dow.”
If you recall, I compared the gremlin that Bart Simpson sees hanging on the side of his school buy to Janet Yellen with the question, is a Fed Interest Rate hikehanging on the side of the school bus or not?
I further asked, “Is the market going to correct more or rally back to the highs?”
Amazingly, and with no wait time, Monday’s session began with a gap up in theDow, which then proceeded to continue into a full-on rally leading the Dow right back up to 18,000. Closing price was 17,976.
The S&P 500 rose 1.2% to 2086.24, with banks, homebuilders, andcybersecurity stocks leading the way, just as I wrote to watch last week.
Naturally, we must check in with our Economic Modern Family and of course, our herd of grazing sheep!
Beginning with the senior member Russell 2000s, it gapped higher yet remains below the highs of the huge correction day on March 25th. Volume was extremely light. Grandma Retail (XRT) came very close to the recent highs and one would expect that she will match and take out those highs unless there is some unforeseen nastiness.
Big Brother Semiconductors (SMH) returned to an Unconfirmed Bullish Phaseso definitely needs another day above the 50 DMA to confirm. Rocking sistahRegional Banks (KRE) well, rocked; yet could not quite close over the January 6-month Calendar Range high 41.06. Transgender Transportation (IYT) has more work to do and must be kept in focus for signs of impending trouble for the rest of the crew. Finally, Biotechnology (IBB) doesn’t have to do too much-it just has to keep its head above the 50 DMA for now.
The recent Shepherds for the flock come in the form of Regional Banks,Homebuilders, Retail and China-which made new multi-year highs.
And what about Interest Rates or our Gremlin on the side of the bus? Second Inside day in a row (when the trading range is within the trading range of the day prior. In this case within 2 trading days prior). Big eyes here for Tuesday-seems to me, the way the 3 day pattern breaks will have a significant impact on not only the overall market, but the particular sectors and groups that find relief or turmoil from interest rate movements.
S&P 500 (SPY) Cleared 208, what we considered resistance and now will consider pivotal Subscribers: Pivots Positive in all
Russell 2000 (IWM) Cleared over 124.20 now pivotal 126.60 next point to clear to see our way to new highs. Under 124.20 expect a move to the gap 123.23, which would take wind our of the sails.
Dow (DIA) 180.16 next resistance if it holds the 50 DMA or 178.35
Nasdaq (QQQ) 107 next point to clear, 106 support to hold
XLF (Financials) Return to an unconfirmed Bullish Phase which is very good news if holds
KRE (Regional Banks) Could not close over 41.06 yet now has to hold 40.70.
SMH (Semiconductors) 55.64 the 50 DMA to hold now
IYT (Transportation) 159.41 would be good to see clear. In the meanwhile, 155.22 the 200 DMA is what really needs to hold
IBB (Biotechnology) 354 Resistance and 335 major support
XRT (Retail) 101.83 the high to clear
IYR (Real Estate) Lagging due to interest rate concerns-over 80.00 could have a bounce
ITB (US Home Construction) Closed on new multi-year highs.
GLD (Gold Trust) 115 now resistance but did hold the 10 DMA so Monday’s lows good support
USO (US Oil Fund) confirmed Bear phase with 16.87 support and over 17.47 better
XLE (Energy) Back to an unconfirmed Recovery Phase looking for a second close above 78.00
XOP (Oil and Gas Exploration) Like this over 50.00
TAN (Guggenheim Solar Energy) Looking for a new buy
TBT (Ultrashort Lehman 20+ Year Treasuries) TLTs see above
UUP (Dollar Bull) 25.58 should hold
EEM (Emerging Markets) Unconfirmed Recovery Phase and still basing
EWG (Germany) Back over 30.00
FXI (China Large Cap Fund) New multi-year highs on great volume
EWY (South Korea) Over 57.77 good point to clear
RSX (Russia) Good close-last time it cleared and closed above the 100 DMA was last September
CORN (Corn) Basing
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
***NEW: Market Tone (What Keith covered during the March 25th Live Coaching). It says Short-term Positive 1, Intermediate-Term Positive 4, andLong-Term Positive 8, back to full Bullish with the positive pivots making today’s low and S1 key numbers to hold.
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)
SWI 50.00 max risk for more of a day to miniswing
IR Like when the range is made in the first 30 minutes and it trades within that all day. Over 68.56 should get some momo and hold 67.85 the 10 DMA
BBBY Reports April 8th Like if holds over 75.40 on reversal or breakout for a mini.
JPM Hammer doji and has to hold today’s low and closer around 61.00. Was upgraded to a target of 80.00
AVGO A top NASDAQ stock. If holds S1, then like over today’s high for mini to swing
VLO Inside day. Like if holds today’s low and could see new highs over R1
Category 4:N/A
Phase Change:
SODA A stone’s throw to clear the 100 DMA and has to hold 18.80 the 50 DMA
PSX Over 80 looks good with risk to 77.25
GE as a 2015 pick, has to clear 25.30 and hold 24.97 good for hybrid to swing
PCAR Cleared the 10, 200 and 50 DMAs and has 3 higher lows since January. Like if holds 63.00 max risk on even an ORR
SFM Has to clear 33.75 now and get some immediate momentum so try as a day to mini if does. Possible brick wall low
Shorts:
Category 5: N/A
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 low
DISH Under S1 with risk to 72.00 area
Best Best wishes for your trading,
Michele Schneider
