Last two days were profit taking opportunities for many longs that were deep in the money. That doesn’t mean one should not be holding onto core positions as today’s “red” day was more of a welcomed respite than a “top”. With Friday around the corner, several technical factors could be more telling about what the market could look forward to. First, after a round of troubling economic indicators (CPI, Housing Starts, Jobless Claims), how much more does the market correct (or not correct) at the end of the week? Can the recent rally take a hit on the chin and move on after this round of economic indicators (typically a lagging sign rather than a leading one)? Secondly, does the US Dollar end over the 200 weekly moving average? Do rates continue to drop or will today’s action be an anomaly? Finally, how much/little volume and volatility accompany any further selling? Low volatility and volume would be a positive sign.
S&P 500 (SPY) Inside day which could make the end of the week even more interesting if the range of last 2 days breaks up or down from here Subscribers: Negative Pivots
Russell 2000 (IWM) Inside day here too. After the 98.00 target, this too will be a good pivotal number to watch as the week ends. Subscribers: Negative Pivots
Dow (DIA) Another inside day here too. 153 was the original target. Subscribers: Neutral Pivots
NASDAQ 100 (QQQ) After the inside day, this made a new highs and closed on the intraday lows. Sometimes an ominous sign, but like all signs, needs confirmation. 74.00 was a target here-something to consider Subscribers: Positive Pivots
ETFs:
GLD 130.00 recent lows to defend and would not be surprised to see some short covering to end the week
XLF (Financials) 19.35 now support to hold. Subscribers: Another one to watch for possible slingshot high
IBB (Biotechnology) Been writing about that weekly Bollinger Band-when it gets penetrated only to see the week end beneath it-watching for that.
SMH (Semiconductors) If you have been buying the dips since 2013 began, you’re in luck-could be another one coming your way. Subscribers: Watch for possible slingshot high
XRT (Retail) Nasty bearish engulfing pattern-new highs, close on intraday lows and taking out prior day’s low as well. Most disturbing sign I see
IYT (Transportation) Reached, breached then closed beneath the 116 target
IYR (Real Estate) Not so bad here-and this group has helped keep perspective on the overall market
USO (US Oil Fund) Unconfirmed return to accumulation phase Subscribers: Had a good day to miniswing trade on the gap over the 200 after 5 days negative pivots. Watch today’s video
OIH (Oil Services) 45.12 is the 2013 high looking somewhat elusive for this week anyway
XLE (Energy) Inside day here
TBT (Ultrashort Lehman 20+ Year Treasuries) Converging moving averages near today’s lows. 63.20 is a good area to see if this can defend or not
XOP (Oil and Gas Exploration) Thought we’d see this reverse the lower highs on the daily chart from the peak price of 2013. Hasn’t happened yet.
XHB (Homebuilders) Made new highs and closed on the intraday lows.
UUP (Dollar Bull) A weekly close over 22.57 will confirm the reversal trend of a weaker US dollar
UNG (United States Natural Gas Fund) Unconfirmed phase change to warning again
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: Cleaned up the list-might be good to watch indexes and ETFs now since market is at an inflection point. Many picks reached the top of their weekly Bollinger Bands with risk/reward way out of whack.
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:
OI 28.24 is max risk and since this still can get to 30 or higher, is one of the few that have a decent risk/reward. Inside day so really, has to clear 28.92
MJN Inside day. 80.00 max risk. Really needs to clear 81.36 to keep going.
NBL Inside day, slightly negative pivots. Has to clear 118.85 and hold 116.12. Could see 120
CAM Compressed between the 10 and 50 DMA with an inside day-can be followed either way it breaks-up or down
Category 2: (Pipeline) N/A
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)
Category 4: (Rip Tide) N/A
Phase Change:
AEM Yes, another potential glass bottom if today’s high clears 29.58 with the 10 DMA at 30.58 next hurdle.
SLW Miner with a slingshot low only this one is the best setup since holding the 80 monthly moving average at 21.27. R1 and today’s high line up
Shorts: Some slingshot highs to consider since touched weekly Bollinger Bands-NFLX QQQ (QID is the ultrashort) BWA AMP
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
PANL Under today’s low and S1 could see sell off to 28.00. Risk 31.16
Bye for Now!
