Coming into this week, the setup was called for either a launch pad from Friday’s trading range or that range would become a ceiling. With the gap higher right from the opening bell, the launch pad scenario should set the tone for the remainder of the week with a couple of caveats. Bonds got hammered today (although no surprise to us who have been of the mindset that rates and the dollar would rise); the question remains on what the overall impact that will have on US equities. The sectors were mixed with the real estate group now below a major moving average while biotechnology ruled once again. The Russell 2000 or small caps outperformed the other indexes even though the Dow did well (but not good enough) given what we call the slingshot high left from May 22nd that still has to be cleared to see a move beyond current levels.
S&P 500 (SPY) Also has to clear the slingshot high from May 22nd at 169.07. The longer it holds the fast moving average or 166, the better the chances of that happening. Subscribers: Positive Pivots in all indexes
Russell 2000 (IWM) Does not have the classic slingshot high, but needs to clear that May 22nd high nonetheless, especially since 100 is a psychological barrier. Has to hold 98.40 level
Dow (DIA) 155.14 number to clear now
NASDAQ 100 (QQQ) Like to see this hold today’s low and get through 74.95
ETFs:
GLD After 2 inside days, this closed down but above Friday’s low, therefore not following through cleanly on the inside day rules. Now, it’s all about 130-the 50% retracement area from 2011 lows to 2012 highs
XLF (Financials) Today’s low good point to hold
IBB (Biotechnology) After holding 1790 support which we wrote about last week, today was the winner but yet-like everything, needs to clear recent highs 187
SMH (Semiconductors) Closed just shy of the fast moving average. 38.00 good level to see hold but also want to see it clear today’s highs
XRT (Retail) 77.00 a really good support level to watch for a hold.
IYT (Transportation) 116 is the number to clear as 113 the number to hold
IYR (Real Estate) Failed the 50 DMA going into a unconfirmed weak warning phase. The 2-day RSI is oversold-72.00 area to clear
USO (US Oil Fund) Interesting with rising rates to see this back over the 200 DMA and an unconfirmed accumulation phase
OIH (Oil Services) Still friendly to this unless it fails 43.50
XLE (Energy) 81.00 has been a big area of support and now 84 area to clear
TBT (Ultrashort Lehman 20+ Year Treasuries) Major game changer today. 2013 high 69.64
XOP (Oil and Gas Exploration) Friendly here as long as 60.00 holds
UUP (Dollar Bull) 22.95 number to clear
SGG (Sugar) Failed that channel again so off the watch until futures clears .17
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: Lots of charts have slingshot looking tops from last week-might need another day to see what will clear and what won’t
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)
MTW 21.15 next hurdle but now, today’s low becomes good point of risk
YELP 29.80 tight risk if this clears 30.30 for possible move up to highs and beyond.
BSX. If this holds around 9.00, could see that monthly MA taken out and 9.39 recent highs.
USG 28.55 new support and 30.00 next point to clear
IP Island bottom was made here on May 2nd. If that island bottom is good, this should clear 49.00 for another 5.00 move up. Support today’s low
APC Has to clear 92.18 hold today’s low for more upside
INTC Held 24.00 and can use 2 ATRs or around 23.50 for risk. Has to clear 24.50
HAL Over 44.00 like it better with risk to around 43.70
NTAP Through 39.00 should continue provided 37.00 holds
Category 4: (Rip Tide) N/A
Phase Change:
IBM Over 210 looks good til 216 and has to hold todays low
ESV 2013 pick. Cleared the 10 DMA making today’s low a good risk
Shorts:
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
WLL 46.52 max risk and has to break 45.30
Category 6: White Cap-Having a 2-3 Day correction over the pivots. In a Negative Phase, Positive Pivots. Can sell an Opening Range High Failure if happens below R1 or previous day high whatever is higher and/or weakness if breaks S1 and prior day’s lows
EXPE 59.40 is the 200 DMA for this to stay below with S1 58.50 to break
Bye for Now!
