I tend to despise hackneyed phrases like "Sell in May, then go away." I believe they become self-fulfilling prophecies and certainly, here we are May 1st, and that adage looks accurate. But, I have also seen about 5 other calls for the top this year that panned out for a few days, only to see the market reverse and go on to new highs. The FED left policy unchanged-they will continue to pump money through bonds. The economic numbers were disappointing-which is the main reason for the drop (and Bonds continue to reflect fear as do the small caps Russell 2000.) However, NASDAQ held 70.00 with the possibility it could be a topping candle (a Japanese technical analysis technique to document the daily high, low and close, different than the traditional bar chart.) S&P 500 held the major key moving averages although again, with the same nasty looking candle. The Dow hadn't made a new high, but did manage to hang onto the moving averages. With all indicators, a second day confirmation is not only necessary, but prudent before calling out key reversals. And so we remain, prudently yours!
S&P 500 (SPY) Distribution day in volume but not enough to be that scary or that indicative of a one day correction only. Subscribers: Pivots negative in all indexes
Russell 2000 (IWM) Unconfirmed phase change to warning but more importantly, a ghastly drop from Tuesday's high with nearly triple the average volume. Only a return over 92.50 would reverse the aphorism for May.
Dow (DIA) 146.50 support area held. Important to note
NASDAQ 100 (QQQ) Held 70.00 which for now is a relief. Subscribers: marginal slingshot possibility.
ETFs:
GLD A gap lower and this looks pretty weak. A hold of today's low and move above today's high, and the recent bottoming formation remains
XLF (Financials) Held 18.50 key support.
IBB (Biotechnology) Long term this is a continuing growth area. Short term, it looks a bit tired
SMH (Semiconductors) Subscribers: Another possible slingshot high if follows through-but would only see it as an opportunity to buy again once the correction plays out
XRT (Retail) Broke 72.80 , a support level. Now needs to hold 72.00
IYT (Transportation) Mirroring the Russell 2000. Also, started this week mentioning the lower highs on every rally. Subscribers: Standing out of its way for now
IYR (Real Estate) Perhaps a topping looking candle. Outperformed however and still a good area to gauge for how the market might or might not hold up
USO (US Oil Fund) Wrote that lower prices were in store and with the gap down, unconfirmed bearish phase
OIH (Oil Services) Interesting that this actually confirmed the bullish phase change Subscribers: Still making lower but also on my radar over R1 and today's high
XLE (Energy) Back to warning phase also unconfirmed Subscribers: Out on a chandelier exit
TBT (Ultrashort Lehman 20+ Year Treasuries) Back to the drawing board here with a new low Subscribers: A move back over 58.97 would be interesting for a new reversal pattern
XOP (Oil and Gas Exploration) 55.60 the 200 DMA Subscribers: Aside now
XHB (Homebuilders) Short-term high in place-now coming into some support
SGG (Sugar ETF) Subscribers: Stayed long watching the futures to hold 17.00
FXI (China) Subscribers: No loss stop in place under the 200 DMA
RSX (Russia) Subscribers: Out with a breakeven stop on the balance we were holding
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:
Post Earnings Trade: YELP if gaps over 27.30 is a breakaway gap to watch for a 2 minute fade/follow or a 30 minute ORR or breakout
WLP 72.00 good risk area. Like to see it clear 73.20
CROX 15.70 is key to hold and if can clear today's highs looks a lot better (kept ½ position on the ORR)
BAC 12.02 is the max risk on this correction. Has to get above 12.20 first then today's high
LEN 39.85 is max risk as the 10 crossed over the 50 DMA for an improved condition. R1 would be good to wait for
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)
GMCR Reports May 8th. Too late for swing, but interesting doji day if 56.00 holds
PCAR Held the bullish phase, with an inside day and a condition improvement. Still want to see it cross R1 to be back in the game
Category 4: (Rip Tide) Oversold (2 or more days under FTP), Condition 4, Needs to clear R1, Risk previous day low unless noted differently, Target- Day to at least 3 ATRs from entry:
AWAY Now really overbought which means if holds 29.14, might be time to consider this for a bounce
Phase Change:
AEM Holding the lows from 2011 and had a slingshot low on Tuesday followed by an inside day today. Like over 32.30 for swing with stop under 30.36
OI 25.90 can be used now as the new risk
PETM Reports May 21st Held the 200 DMA but with a possible slingshot high so now, today's low has to hold
SYK Has to hold today's low and really clear 65.80, but overall chart looks decent
IBM Inside day on the 200 DMA-worth watching over R1
JCP Reports May 15th If you believe in Soros, this held the 10 and the 50 DMAs with max risk 15.86. Has to clear today's high and R1
Shorts: Not seeing much where the risk is reasonable for a mini to swing trade
Bye for Now!
