Market two-faced? Wearer of many masks? Nah!!! Is it a comedy, tragedy or a little of both? Yeah!!!
What about the word "tragedy" derived as a compound of two Greek words: (tragos) or "goat" and (ode) meaning "song?"
Were our bleating goats bleating on Monday? Affirmative.
Over the weekend we visited my Economic Modern Family. Now that they have had a chance to holiday and eat well with one another, let’s check back in.
Transportation (IYT) confirmed the Distribution Phase, which means even with the market strength, it could not clear back over the 200 DMA. I find this concerning. Clearly a reflection on not only the slower job growth after last week’s numbers, but also an indication that the economy needs more work at its core.
Semiconductors (SMH), I would give a “C”. Sure, they closed right above the pivotal point 54.85 but they remain in a warning phase. Unless they clear 55.70, weakness prevails.
Biotechnology (IBB), didn’t fall apart but certainly did not evoke major confidence either since it could not bounce more convincingly off the 50 DMA (although in a bullish phase at least), and could not close over 340.
Grandpa Russell 2000’s, as mentioned, might be more entertaining, but will not get a standing “O” from yours truly until it clears 125.60.
Granny Retail (XRT) is the favorite for the Golden Globe, basing near the highs. Sister Regional Banks (KRE) is a contender, but has to really clear 41.20 now and hold 40.00.
We had some stellar performances, particularly in the oil and oil holders andenergy groups. Gold cleared the 50 DMA to change to a more positive phase. This does seem to suggest that the Fed might have a better reason to raise the interest rates by June, but it does not serve them just yet to commit to that one way or another.
I do find it interesting that expectations have been for deflation to be the big reason for a market decline, when in turn, it seems that it could be more that the Fed will lose the grip on low rates in the US while the rest of the emerging markets defends them and commodity prices increase.
While the world turns and the drama plays out, I will remind you of our friends the sheep and their predictable habits. We saw them retreat last week and see them grazing to start this week. They do not run for the hills, nor do they separate too long from the herd. Keep your overall active trading light, think about some of the countertrend trades finally basing, like the commodities and a few other choice equities, and take quicker profits on the momentum trades.
S&P 500 (SPY) Unconfirmed return to a Bullish Phase. Held 204 early then cleared 208 later on, but could not close above it. Subscribers: Positive Pivots in all
Russell 2000 (IWM) Need to see this over 125.60 and under 124.20 trouble
Dow (DIA) Unconfirmed return to a Bullish Phase. Cleared 178.50 which is good if holds. We have a couple of bottoms at 175.50 area
Nasdaq (QQQ) Unconfirmed return to a Bullish Phase. 106.50 has to clear or under today’s low trouble
XLF (Financials) Unconfirmed return to a Bullish Phase. The 50 DMA is key here and in the 3 indices which cleared it today as well
KRE (Regional Banks) A close over 41.20, I think I love you
IYT (Transportation) Unless this gets back over 155.42 pay attention
IBB (Biotechnology) Under 334 trouble
XRT (Retail) Like to see this clear 101.83 and hold 100.00
IYR (Real Estate) If holds 80.00 good or under 78.60 see more downside
ITB (US Home Construction) Possible reversal candle
GLD (Gold Trust) Unconfirmed Recovery Phase provided it holds 116.08
USO (US Oil Fund) Unconfirmed Recovery Phase provided it holds 17.70
XLE (Energy) Great trade if took the move over 78.00. Now, has to hold there
XOP (Oil and Gas Exploration) Great move over 50 now running into resistance at 53.00
UNG (US NatGas Fund) Possible reversal candle last week and a double bottom with an inside day to start the week
TBT (Ultrashort Lehman 20+ Year Treasuries) Evidence of market perception on rates and a rise here with the TLTs breaking back under the 50 DMA
UUP (Dollar Bull) 25.40 is the 50 DMA
EEM (Emerging Markets) Been writing about the basing since middle of March-today it cleared the 200 DMA
EWW (Mexico) Got the close over 60.00. Now a dip buyer until 60 breaks
RSX (Russia) Gave the stream this one too over 17.40-now, took some profits and waiting to see if can muscle to the 200 DMA
CORN (Corn) Over 26.00 gets interesting
BAL (Cotton) Cash was the place been talking about
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: Short-term Positive 3, Intermediate-Term Positive 5, and Long-Term Positive 8, aggregate makes it a positive 16. We are calling this a trading range within a trading range. NOTE: Market Tone is updated before the open each day and reported to you on twitter.
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:
EA Held Thursday’s low, and now must clear 58.09-like for a day to mini
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)
DLTR Slightly negative pivots. Over today’s high clears the 10 DMA and must hold Monday’s low
ADSK Inside day. Like if holds around 58.75 with 62.00 next resistance
Category 4: N/A
Phase Change:
LVS Risk now to today’s lows with a move over today’s high clearing the 100 DMA
FSLR 60.50 is a good nearby support place for a miniswing if can take out 62.00
EMC an ORR would be better now but like the bottoming formation
JPM Like this over 60.95 with a risk to around 60.00
FDX 164.16 is the 200 DMA and a good risk. Has to clear 167.38
PM Need an ORR now
YOKU Tight range so now, if holds around 12.75 can look at an entry
Shorts: Focus List: EBAY if doesn’t clear the 50 DMA
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
ILMN Under today’s low breaks the 200 DMA and risk to around 181.70 for a daytrade if breaks
GILD Inside day. Should not clear today’s highs
Category 6: N/A
Best Best wishes for your trading,
Michele Schneider
