I Live, I Die. I LIVE AGAIN!
This weekend, we went to see Mad Max in 3D! Some of the characters reminded me of a combination of Jabba the Hut, Zombies, and the Man (he was nameless) from “The Road.”
Our entire New Mexico office staff got together to eagerly don our 3D glasses because for the past 2 weeks prior, and in spite of the fact we all anticipated the absurd characters, far-fetched plot (or lack thereof) and CGI sets, they have heard me go on and on about Mad Max and its message about water.
Quite honestly, I had no idea just how much the plot would center on water; however, coincidence or not, the ETF for water (PHO) had over a 3% move last week and began this week equally strong.
Commodities in general are a huge focus currently. Silver, although not on 2015 highs (17.89) has left a significant bottoming pattern. Gold has virtually ignored the rise in the 20 Year Long Bonds (or decline in TLTs). Silver might be shinier, but Gold’s move is impressive.
With life imitating art, oil (also in shortage in the post-apocalyptic world of Mad Max) took a backseat to the essential need for water. USO the United States Oil Fund, like many soft commodities (corn, sugar, coffee) are basing, or at least trying to.
All of this while the Dow made new highs! Historically, when commodity prices are high, they serve as a “tax” on corporate earnings worldwide. Likewise, when commodity prices are low (especially oil and, increasingly, natural gas), they act like a “tax cut” for corporations. This interaction results in a counter-cyclical relationship between commodities and U.S. equities.
Yet, like so many other historical relationships lately, old timers who tend to stick to the old paradigms, now have to stay open to the Millennial’s world of shifting paradigms.
The good news is that my reliable Economic Modern Family all woke up happy. To my mind, in order for this equity rally to sustain, (commodities I’m looking out for much longer), the Russell 2000s (IWM) have to stay in the game. Retail(XRT) has to hold above the 50 DMA. Semiconductors (SMH) andBiotechnology (IBB) simply have to keep firm but not lead. Regional Banks (KRE) or really the financial sector in general can take the lead andTransportation (IYT), which cleared the 200 DMA, has to get comfortable again.
Mad Max: Over the top? Radically visionary? Extravagantly deranged? All of the above?
Many say the same about the market!
S&P 500 (SPY) A year ago the breakout projected a move to 220. Now, looking more feasible. Subscribers: Positive Pivots in all
Russell 2000 (IWM) Played catch-up and now in an unconfirmed bullish phase looking for a second day.
Dow (DIA) New high intraday but then closed at 182.68, the old high
Nasdaq (QQQ) Has room to the top-111.16. I figure by the time it gets there,
SPY DIA will look really overbought.
XLF (Financials) Over 24.90 takes out all of the 2015 consolidation
KRE (Regional Banks) He’s back! New 2015 high.
SMH (Semiconductors) Just needs to hang out and not selloff
IYT (Transportation) Unconfirmed warning phase looking for a confirm
IBB (Biotechnology) Just needs to hang out and not selloff
XRT (Retail) Intraday cleared 99.65 the 50 DMA, and closed shy of it
IYR (Real Estate) Inside day over the 200 DMA
ITB (US Home Construction) Hasn’t cleared the 50 DMA
GLD (Gold Trust) Confirmed Accumulation Phase
GDX (Gold Miners) Inside day under the 200 DMA
USO (US Oil Fund) Inside day with a move over 20.55 a good sign for this ETF
XOP (Oil and Gas Exploration) Inside day has to clear 51.45
TBT (Ultrashort Lehman 20+ Year Treasuries) Back over the 200 DMA making it look like the rate rise not over
UUP (Dollar Bull) Over 24.80 looks like bottom in place again
IFN (India Fund Inc.) Cleared the 200 DMA so now has to hold
EWG (Germany) Looks ripe for higher
FXI (China Large Cap Fund) Look at the runaway gap form April 8th. Still holding
DBC (DB Commodity Index) Love this
SGG (Sugar) Hovering around the 50 DMA
JO (Coffee) Closed over the 50 DMA, first time since November 2014
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 1, Intermediate-Term Positive 5, andLong-Term Positive 10. NOTE: Market Tone is updated before the open each day and reported to you on twitter.
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)
PNRA With 23 days of consolidation, the move will be well worth the time we’ve taken to write about it each day. 180 still max risk. Over 184.21 shut your eyes and buy. Any OR setup or any type of trade
JCP Doji day. Have ½ and will look to add using same stop if clears over 8.65. The number of shares will total the $500 risk to the stop
Category 4: N/A
Phase Change:
FB 2 Inside days. As long as it is above 81.03 (the 50 DMA) then can daytrade to miniswing this. Any OR will do
TEX Inside day. Like for day to miniswing. Risk outside day low 27.84. Has to clear 28.77 the 200 DMA
IBM 2 day return to the 10 DMA. Like the day to miniswing risk using 169.30 the 200 DMA. Has to clear today’s highs which lines up with R1. 5 or 30 min OR
SODA Narrow range inside day. As long as it holds 21.04, like over 22.10 to see if it can muscle through the 200 DMA Day to mini-5-30 min OR
P Like it over the 200 week moving average at 17.72. Inside day so has to clear R1 18.47-best for swing on a 5 or 30 minute OR
Reversal Trades: (Glass or Brick Wall Bottom or Top):
DRI Like miniswing risk to the 100 DMA. Any OR is fine. Made a 2-day pattern 2 weeks ago and seems to be basing.
DDD 2 day brick wall classic reversal pattern-range, volume-what we like to see. Risk has to be to the lows 20.82. Like on any OR for swing
Shorts: Focus List shorts: WFM TDC Under S1
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
BIDU Inside day. Can’t clear 192.90. Looks lower-day to miniswing any OR. Has to break S1
Category 6: N/A
Best Best wishes for your trading,
Michele Schneider
