If Bored Remember-You Are On A Rock Floating In Outer Space
Tuesday’s night’s commentary I told you a little about myself and my loyal nature not only to people, but until proven wrong, to the bullish bias of the market. I further went on to talk about the market’s seven year itch since our love affair began in 2009, seven years ago!
The “itch” seems to manifest by the market’s stubborn and fairly obnoxious choppy, trading range action peppered with sector and group rotation along with the occasional one day wonders-perfect example lately-AOL.
A characteristic I repeatedly read on twitter Wednesday about the market was “BORING!” That got me thinking about how boring fits into a long term relationship. Is it good or bad?
Boring as an adjective means dull, repetitious, and uninteresting. Concerning the market and the bullish bias, I’m not unhappy about that. It’s like calling your mate “boring” because he/she is like the sea and lacks variety. But like the sea, you’re sure glad he/she’s always there!
Boring as a noun means the act or process of making or enlarging a hole. That is not the definition we want to see to describe market action-not if you are a bull anyway. Nor do I imagine any of us want a mate who “bores” through your spirit or one could say, presses your buttons. Grounds for divorce!
That brings me to a promise I made in Tuesday’s daily-to write once again the signs of a top since as mentioned, “the bear market ended dramatically in the spring 2009, so it does stand to reason that the bull market since 2009 needs some equally if not more dramatic conclusion.”
I’m not advocating for a top. En contraire, the move in Regional Banks (KRE), the digestion in Biotech (IBB) and Semiconductors (SMH), even the minor sell-off in Retail (XRT) after the poor retail sales stats has me content with boring. Although Transportation (IYT) continues to weaken, at this point, it’s so close to long term support going back to an important weekly moving average, I’m not too concerned until it breaks under 151 on a weekly basis.
Since a promise is a promise here goes: 3 Signs of a Top
1. Double the average volume on a move to new highs or a blow off top. Has to confirm within a couple of days.
2. An island top-gap over all work to new highs, followed by a gap lower for 2 or more days leaving literally an island.
3. A chart pattern such as a double or triple top with follow through. (Although no real follow through, the S&P 500 chart could have a potential double top from the February 25th high and the April 27th high. If that is the case, to confirm has to break under 204, the low made between those 2 dates).
S&P 500 (SPY) Closed at 210-right on support. If cannot hold the 207 area.Subscribers: Positive Pivots in all
Russell 2000 (IWM) 120-123.85 range within the range-only index in warning phase
Dow (DIA) Needs to clear 181.28 to begin and hold 179.85 area
Nasdaq (QQQ) 108 pivotal
XLF (Financials) 24.24 key support and over 24.70 better
KRE (Regional Banks) Sweet!
SMH (Semiconductors) 55.00 support and through 56.80 good
IBB (Biotechnology) 350 pivotal
XRT (Retail) Over 99.65 clears the 50 DMA
GLD (Gold Trust) That negative slope in the 50 DMA now positive. If it is truly bottoming, has to hold now over 115
GDX (Gold Miners) Up to the 200 DMA resistance
USO (US Oil Fund) Looks good longer term as long as it holds 20.00
UNG (US NatGas Fund) Follow through after it closed over the 100 DMA
TAN (Guggenheim Solar Energy) long term bullish
TBT (Ultrashort Lehman 20+ Year Treasuries) Held the 200 DMA confirming the accumulation phase then closed on new 2015 highs
EEM (Emerging Markets) Monthly chart has huge consolidation going back to 2011
CORN (Corn) Like over 23.40
BAL (Cotton) Like the chart overall
SGG (Sugar) 12.84 cash support to hold
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
***Market Tone: Short-term Positive 2, Intermediate-Term Positive 4, andLong-Term Positive 9, aggregate makes it a positive 15. NOTE: Market Tone is updated before the open each day and reported to you on twitter.
Category 1: N/A
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:
PNRA Over R1 clears the 10 DMA with a risk to 180 still intact for a swing. Like on a 5 or 30 minute OR
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)
ADI 61.50 max risk against the 50 DMA. Near term like to see it hold today’s low. Closed over pivots and tested R1. Now, has to hold and can look at an ORR or a 30 minute for a mini to daytrade
DE 90.39 max risk now for a mini if can hold there and then has to clear 91.50 or no good. Can do ORR or any other OR if risk is in line
CIEN Inside day like for a miniswing max risk to pivots only 21.90 if clears 22.16 OR-5 or 30 Minute
Category 4: N/A
Phase Change:
CCUR On the list for a 2105 pick since been a takeover candidate for some time and is over the 80 month moving average. Cleared 3 moving averages with double the normal range and good volume. 6.21 bottom line risk and an inside day.
SODA 2 IDs looks great for a continuation miniswing trade with risk to today’s low and has to clear 22.01. Any OR is fine since pivots positive
TEX As risk is wide it has to be a miniswing trade with risk to 27.95 the 10 DMA to see if it can clear the 200 DMA at 28.87. Like on any OR
Reversal Trades: (Glass or Brick Wall Bottom or Top):
FB Classic 2-day pattern over the 200 dma. As swing have to risk to under 76.79. As mini can use today’s low. OR any is fine
Shorts: Focus List shorts: WFM CTSH
Category 5: N/A
Category 6: N/A
Best Best wishes for your trading,
Michele Schneider
