The market got a glimpse of what havoc could be wreaked if the FED decides to reverse the Quantitative Easing Policy that has been in effect for quite some time. However, what could that possibly mean under the surface? For starters, it could mean that the rates will rise, along with the US dollar which indicates that the FED might have more confidence that the patient (The US Economy) can continue to improve without the IV drip. (Mission Accomplished to appropriate yet another hackneyed phrase!) Be that as it may, our job is not to judge what the powers that be do, rather to anticipate what impact that might have on the markets and in particular, which groups will do well and which ones will suffer. And most likely, nothing will happen other than a repeat of the usual-economy improving, will keep policy in place, until such time as-blah, blah, blah.
S&P 500 (SPY) One red day since last Friday doth not a top make. However, some healthy correction wouldn’t be so bad either. Until gap low from last Friday violated-noise. Subscribers: Neutral Pivots
Russell 2000 (IWM) 97-98.00 reasonable target it holds 95.00 Subscribers: Pivots Negative
Dow (DIA) 152-53 resistance and same deal with gap low as support to hold Subscribers: Pivots Positive
NASDAQ 100 (QQQ) A chance today was a reversal candle, but has unless it breaks the gap low at 71.91 hard call to make. 74.00 still a target Subscribers: Pivots Positive
ETFs:
GLD A weekly close under 140.55 and the recent bounce from the lows could be history
XLF (Financials) 19.38 overhead resistance Inside day. Subscribers: Got pretty close to target of 5 ATRs at 19.38 (Described options for exiting on today’s video)
IBB (Biotechnology) With a reverse candle sitting at the recent highs, could be vulnerable if that does not clear
SMH (Semiconductors) Broke over an 11 year channel, but also a bit overbought now. Subscribers: Got pretty close to target of 8 ATRs. (Described options for exiting on today’s video)
XRT (Retail) No runaway gap here so a good place to see how this recent move digests
IYT (Transportation) Subscribers: Could be a brick wall, but I rather say an opportunity to see a correction to get back into this group.
IYR (Real Estate) Taking a breath
USO (US Oil Fund) As long as this holds the 200 DMA still in a more positive phase
OIH (Oil Services) 45.12 is the 2013 high
TBT (Ultrashort Lehman 20+ Year Treasuries) Rumor sensitive, but for us, still thinking a buy especially if holds 62.20.
XOP (Oil and Gas Exploration) 60.00 resistance Subscribers: Held the 50 DMA and now needs to get through 60.00
UUP (Dollar Bull) Watching that 200 weekly moving average like a hawk
UNG (United States Natural Gas Fund) Subscribers: Like to see the 50 DMA clear
SGG (Sugar ETF) Subscribers: Still resting if holds 61.76
FXI (China) Subscribers: Correcting now.
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
**NOTE: New and Old Subscribers: I do not include on the list 1. Anything with a weekly or daily RSI over 92 2. Anything within 4 days of reporting earnings 3. Anything with a risk over 1 ATR from its current close 4. Anything with only one day under the Floor Trader Pivots (unless specifically noted. 5. Anything with a potential slingshot or brick wall high (new 60 day high, close in the bottom 25% of the intraday range.)
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:
SPLK A 2013 fave, held the 10 DMA giving today’s low a good risk if clears 43.90
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:
MJN Oversold but improved in condition to a 2. First has to hold today’s low, clear 79.25 then today’s high which will get it back over the 10 DMA.
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)
TPX improved in condition to a 1. Also improved phase to unconfirmed bullish. For a Friday, would like a risk only to around 47 on a reversal or breakout
SODA Reported and today gapped back over the 10 DMA. Has to clear 56.62, but if does, looks like a decent base.
BEAM Inside day although slightly negative pivots which means R1 and today’s high has to clear
IGT Settled where it has to hold 17.53 level.
LVS Now, would only add or buy new over the brick wall high 57.88
CVX Has to clear 123.72 and hold today’s 122.25 conservatively. Has some overhead at 125 but not firm since on new highs
NTAP Reports May 21st. Inside day. 36.00 some overhead resistance to clear.
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:
HES Held the 50 DMA making 70.65 max risk and now like to see it clear today’s high
Phase Change:
JPM 48.70 converging moving averages to watch for hold
AWAY Confirmed slingshot and has to hold today’s low, clear R1
SWC 12.19 area support to hold and if does, still in play
Shorts: No shorts with great setups
Bye for Now!
