An incredibly orderly and logical (almost transparent) conclusion to last week. NASDAQ achieved distance from the 50 DMA, The Russell 2000s cleared the 200 DMA, and the S&P 500 closed on new highs!
Of course the week ended well on light volume, so it does beg the question on whether the market went up on fumes or is this the proof of the allegory “The Boy Who Cried Wolf” where the sheep are dead because the adults failed to show up to protect them? In other words, were most bulls on vacation and the rally for real?
The strength began where it needed to: GOOG NFLX TRIP AMZN TSLA, etc.-the ones so beat up during the early part of the year. The leading groups have been Transportation, Energy, Real Estate and Semiconductors. Except for Transportation, those moves were relatively muted at the end of last week.
The laggards remain Retail, Homebuilders (good boost on Friday) Financials, and Biotechnology. Two logical conclusions, if logic is something to be counted on.
One: The market brings back the more confident buyers and we see S&P 500 at 220 during a rare summer run. Furthermore, Rotation, rotation rotation-the big guns digest and the other sectors play catch up.
Two: Last week was a sucker’s play and since not all sectors participated, the NASDAQ stocks turn down on Tuesday or worse, gap down and head south viciously hurting those who built up a long portfolio in the big names and did not take profits.
For consistency’s sake I end with a comment on rates. Not much changed as far as confirming or invalidatinga potential bottom in rates. In fact, the action Friday was rather milquetoast. Relative to last week’s rally, the classic relationship should have been for rates to firm. That’s where logic turns to inanity. That where a protective and diverse portfolio continues to dictate our trading for now.
S&P 500 (SPY) New high close which of course is sexy and compelling Subscribers: Positive Pivots in all
Russell 2000 (IWM) What a relief to see this clear and hold over the 200 DMA plus, close well. Best case for a continuation rather than a contrarian point of view
Dow (DIA) 166 next point to clear
Nasdaq (QQQ) Good news-great follow through-the case for digestion and perhaps a mellow correction-now a bit overbought. 88.35-60 now support
XLF (Financials) Unconfirmed phase change to bullish. Good thing
SMH (Semiconductors) Looks a lot better with 45.50 some resistance ad 45.00 support
IYT (Transportation) Another new high close and not overbought
IBB (Biotechnology) Confirmed the phase change to bullish and a muted inside day-big eyes here
XRT (Retail) Continues to be troublesome unless here is where we say a major catch up move this week
IYR (Real Estate) Good housing numbers and this is back in the game
ITB (US Home Construction) Basing if holds 23.75
GLD still just chopping around sideways near all the moving averages so keep looking
USO (US Oil Fund) New 2014 highs
OIH (Oil Services) Inside day
TBT (Ultrashort Lehman 20+ Year Treasuries) TLTs Closed red on the week but up from the lows of the week
UUP (Dollar Bull) Bottoming action still in play with 21.50 the elusive resistance which it touched but did not clear
KRE (Regional Banks) A real underperformer
EWP (Spain) Subscribers: Like this over Friday’s highs with a new risk to under last week’s low
FXI (China Large Cap Fund) Interesting spot right under the 200 DMA
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
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:
CNX Inside day with R1 and Friday’s high lining up and a risk under 44.00 good
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)
WFC Now, an ORR would interest me with the highs from 2014 50.49 to clear
INTC Had its first close over the 10 DMA since April 4th. We are ling and will keep it with stop under 25.75 for now
GCI ORR is better here but 27.50 means that as risk I would consider a breakout
SPWR Looks ready for next week especially if holds around 31.00
MSFT Not as exciting but with 2 days compression over 40.50 could get exciting with risk 39.92
HST Over 21.79 clears recent highs for a good Hybrid/Miniswng trade risk to around 21.50
PLD Never really failed, more sideways than anything. Now, if holds 40.40 as risk, will look for a new entry-long term looks great
JBLU I will feel better about ORRs in general but overall, this looks great longer term
HSP Still has room for a miniswing trade after an inside ay-looks poised to at least 50.00 if 47.75 holds up
NOTE: STX AXL GS NWL GT TXT (all but STX 2014 picks) also noteworthy
Category 4: (Rip Tide)N/A
Phase Change:
TSLA If clears 50 DMA have a whole new risk based on the setup
BIIB Inside day over the 50 DMA good risk to 294.90 with a move over 303.17 good
NWL A 2014 pick and now about to tackle the 200 DMA after a brick wall bottom-
BZH One push clears the 200 DMA at 19.91 with it clearing the 80 monthly as well for a longer term buy/hold trade
OC Like how it moved on Friday and will be a major focus Tuesday if holds 41.00 level
PM Has to clear 86.90
CCL tested 40.00. Risk better now for a miniswing trade
AMPE Really like the flag forming on the 200 DMA and over 7.67 clears and breaks it
Shorts:
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
RRC if breaks 88.19 S1 also breaks the 50 DMA making Friday’s high a good risk for a move town to around to 83-84
D Inside day risk for swing is the 50 DMA 70.50 with a move under 68.96 good to follow
CBST Inside day and under all the moving averages has to break 64.16 and the swing resistance is 69.20
DE Resistance around 91.20 and if breaks 89.26 could see down 87.00
NOTE: BBBY DRI LNKD PG also noteworthy
Bye For Now!
