After the slingshot high left from May 22nd that still has to be cleared to see a move beyond current levels, we are boxed in after Wednesday’s session near the lower end of the range established since then. One could almost draw a perfect rectangle around the price action from May 22nd until today in the S&P 500. Therefore, there is no denying the key reversal pattern that was left after the market made new highs last week and if this week’s low is violated, there will most likely be no denying the market will retreat further, perhaps to the still strong upward sloping 50 simple moving average. Long Bonds bounced back a bit; but the shift seems to be to more skepticism concerning the Fed’s back and forth policy on the future of the quantitative easing. The market despises uncertainty. Until clarity emerges on whether rates will rise or stay artificially low (although already up a bit from the all-time lows) market could stay skittish. Then, once investors can count more readily on a higher US dollar and higher interest rates rather than lower US dollar and lower interest rates, new trends will emerge. For now, choppy conditions, tough going.
S&P 500 (SPY) 163.94 is the low end of this week’s range. Yet, through 166, new life Subscribers: Negative Pivots in all indexes
Russell 2000 (IWM) Percentagewise closed weakest, but chart formation, it is the middle of the boxed range from 5/22 high to Tuesday low and hovering around the fast moving average.
Dow (DIA) 155.14 number to clear. Through 154.40 will look better and under 153.48, expect more pressure
NASDAQ 100 (QQQ) 73.00 to 75.00 is the boxed range here for now
ETFs:
GLD Inside day and after a surge in miners, could see a move up to 138 should 134 level hold
XLF (Financials) Way outperformed the overall market and holding around the fast moving average for now.
IBB (Biotechnology) 179 support and needs to clear recent highs 187
SMH (Semiconductors) Closed just above the fast moving average. 38.00 good level to see hold but also want to see it clear recent highs 38.88 for another leg up. Best performer.
XRT (Retail) 77.00 held for now but now has to clear 78.00 to return confidence
IYT (Transportation) 116 is the number to clear as 113 the number to hold
IYR (Real Estate) Seems like the housing ETF is readying itself for higher rates. Well under the 50 DMA and back into the March trading range support
USO (US Oil Fund) Yo-yo up and down the major moving averages
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) After Tuesday’s huge rally, today was an inside day.
XOP (Oil and Gas Exploration) Friendly here as long as 60.00 holds
UUP (Dollar Bull) 22.95 number to clear and 22.55 area to hold
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) Positive Phase, Condition 2-3, 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:
FSLR 50.00 looking like support, 51.80 pivotal and over 53.63 could still continue up
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, 20.00 good support area to hold
YELP 29.00 risk if this clears 30.50 for possible move up to highs and beyond.
TTM To control risk, 28.00 is the area to hold and watching for an opening range reversal or breakout
DDD Inside day with 46.20 good support area. Has to clear 47.90 to keep going
INTC Held 24.00 and can use 2 ATRs or around 23.50 for risk. Has to clear 24.50
NTAP Inside day.Through 39.00 should continue provided 37.00 holds
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:
IP Island bottom was made here on May 2nd. If that island bottom is good, this should hold today’s low on the 50 DMA and clear today’s high then 49.00 for another 5.00 move up.
MBI Good correction and outperformed today. The low 13.76 would be max risk. Over R1 and today’s high line up
PIR Oversold. Right on the 50 DMA making today’s low max risk and like to see some confirmation like R1 to be taken out
Phase Change:
IBM Over 210 looks good til 216 and has to hold todays low
AEM confirmed the slingshot low and now 30.00 is a good point to hold
KSS Starter position today against 30.75 and if clears R1, today’s high will add
Shorts:
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
EXPE Today was the day to get short, but still looks weak and culd see 54.00 or lower if a good risk develops
MON 106.41 good risk and under the 50 DMA 105.30 could be setup for more downside
Category 6: N/A
Bye for Now!
