Last breakaway gap in the S&P 500 was back in April 2013, which was good for a rally that lasted the following 14 trading days until a textbook reversal candle ended the fun.
Tuesday, we saw another potential breakaway gap in the SPY which will need another day to confirm but if does, should be good for that price goal of 220 l that I wrote about earlier this year. This index is mildly overbought and has caught a lot of incredulous investors off guard.
Since active investors like to buy ahead of the pack and sell into “irrational exuberance”, there is little to doubt that we are in for more upside from here. Of course, a gap lower can start a new conversation about island tops, but let’s not put that possibility “out there.”
With the screen as green as Brooklyn, USA (in the Botanical not Environmental sense), and now that Retail, Biotechnology and Finance, the not too far in the distant past dogs, are back to Bullish phases. Only head scratcher remains….wait for it…
Rates. I read everything I see come across on the twitter stream as to why rates are low, getting lower and why some see them going to 2012 lows. (Currently TLTs are outperforming the SPY). So, that leaves me wondering where the disconnect lies and ultimately, whether low rates are the good or bad witch in the SPY’s present trip to Oz!
S&P 500 (SPY) Possible breakaway gap if confirms-which means has to hold above 190.50 Subscribers: Positive Pivots in all
Russell 2000 (IWM) This will need to close a second day above the 50 DMA or over 113.25
Dow (DIA) Close to the highs at 167.29, but has to get there-good one to watch for clues-
Nasdaq (QQQ) 91.00 resistance for now and expect digestion from here-would be healthy
XLF (Financials) confirmed phase change to bullish and still lots of overhead resistance-has to hold the 50 DMA
SMH (Semiconductors) Close to a new high closing
IYT (Transportation) Breakaway gap if holds
IBB (Biotechnology) Great follow through-also close to resistance at 242
XRT (Retail) Unconfirmed bullish phase if holds Tuesday’s lows
IYR (Real Estate) New high close for 2014
GLD Ok-got our attention and not in a good way-big gap down under 2 months of work-looks vulnerable
XLE (Energy) Tight compression last 3 days
TBT (Ultrashort Lehman 20+ Year Treasuries) TLTs The energizer bunny that one day will die
PHO (Power Shares Water Resources) Unconfirmed bullish Phase
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) N/A
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)
CNX Like for an ORR mainly now
SPWR Never had an OR breakout but now, has to hold today’s lows to keep moving and then clear 33.00
HST Still eyes here if takes out 21.80 and holds around 21.55
TXT Sitting on the 10 and 50 DMA-if holds today’s low like for swing trade since this has cleared the 80 monthly moving average
EOG Miniswing trade against the 10 DMA for a move to recent highs and beyond
Category 4: (Rip Tide) N/A
Phase Change:
AXL interesting hammer doji under the 200 DMA-like now if holds today’s lows
SWI Cleared the 200 DMA. If holds 38.80 area then could see move to 41-42 next
KSS Cleared the 200 DMA-might report this week-if holds 53.85 then like for a new swing move to 58-59 level
CIEN Over the 50 DMA 20.72 looks good for another leg up
YUM Back on the list with a move over the 50 DMA-risk 75.15 with a target of 78-79
Shorts:
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
PG Cannot clear the 50 DMA at 80.77 and could see move downside to around 76.00
D Short here against the 50 DMA and will stick to that plan with a target of 66.00
JOY Under the 80 monthly moving average with close risk to 59.04 the 50 DMA
Bye For Now!
