Looks like the market is singing Stairway to Heaven-but the temptation to use the stairway up, elevator downphrase is way too tempting so instead I will write, day 3 of follow through in the S&P 500 breakaway gap pattern!
Isn’t that better? How about this: The Russell 2000s closed back above the 50 DMA, giving the bulls a bit more breathing room. Or this, NASDAQ ends with a new 2014 closing high!
Headlines sound amazing, true. Looking around at the sectors-only 2 major sectors are not in a bullish phase:Retail (Bearish) and Regional Banks (Distribution). Both measure an interesting underbelly of the economy-what people buy and how much activity is going on in the local banks. A major barometer? I always have to say I am not an economist, but I do find the lag interesting since it directly looks at the masses and their sentiment.
The TLTs put in another new high and reversed with some large call selling early on in the session. Are we finally at that inflection point? Further proof is needed, but don’t stop watching.
I would imagine May will go out totally the opposite of the sell and go away cliché. June-stay tuned!!
S&P 500 (SPY) Last breakaway gap lasted 14 trading days. This is overbought but not that ridiculously so-only a gap lower would make everyone really jumpy. Subscribers: Positive Pivots
Russell 2000 (IWM) Unconfirmed bull phase-has to stick over the 50 DMA
Dow (DIA) Close to the highs at 167.29, but has to get there-166 minor support
Nasdaq (QQQ) 91.36 is the 2014 high to clear-gap lower, we can talk possible double top
XLF (Financials) Holding pattern here with really low volume-as if its deciding which way the market goes before it responds in kind
SMH (Semiconductors) 46.59 the high of 2014 or this just rallied to it and that’s that
IYT (Transportation) Reverse hammer doji-watch this too-could mean was forced up at the end of the session
IBB (Biotechnology) Did ok, but didn’t wow me
XRT (Retail) Inside day just under the moving averages-can go either way from here
IYR (Real Estate) Consolidating
ITB (US Home Construction) Good action after a scary candle on Wednesday
GLD Reversal hammer candle as if forced down
USO (US Oil Fund) Held on to the fast moving average-looks good still
OIH (Oil Services) New 2014 highs
XLE (Energy) After 4 days of tight compression made new highs
TBT (Ultrashort Lehman 20+ Year Treasuries) TLTs Maybe a reversal from new highs, we have seen this before but not for very long-here goes my “Boy Who Cried Wolf” Theory-one day!! Subscribers: 115.19 the new risk if shorting TLTs-if we go back in will take tighter risks until we get it perfect
UUP (Dollar Bull) Cleared 21.50 and looks ready to go higher
KRE (Regional Banks) If this clears the 200 DMA, could see some nice catching up
EWP (Spain) Subscribers: 3 shooting stars which could give us a new platform to launch from
FXI (China Large Cap Fund) Subscribers: A close tomorrow over 36.22 clears the 65 weekly moving average-first time since 2013
TAN (Guggenheim Solar Energy) Subscribers: Has to clear 41.07 on a weekly closing
SGG (Sugar) Subscribers: A weekly close over 56.50 is a break of a major trendline and a beauty going back since 2011
JO (Coffee) Subscribers: Confirmed the slingshot low-now we will see what it is made of
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:
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:
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)
ATI if holds 39.88 the 50 DMA then could see journey up especially since clearing a weekly moving average
SPWR Has to have an ORR
TXT Sitting on the 10 and 50 DMA-if holds 38.76 like for swing trade since this has cleared the 80 monthly moving average
V Miniswng or daytrade if holds 213
MSFT 39.74 risk if clears 40.40-like for a hybrid swing
OI Already long but good add on an ORR for a daytrade
THC Already long, but could be an add over 47.64
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:
Phase Change:
MS Compressed over the 50 DMA max risk 30.39 looks good if clears 31.50
SWI Tight compression day on the 200 DMA and inside day too. Over R1 clears today highs and the risk for room is 38.35
BZH Here is one that could be an add over the 200 DMA
YUM Inside day and another one that could be a daytrading add over 77.20
GS The well-earned name Goldman Slacks-has to prove itself tomorrow by clearing 162. Then, we can add
Shorts:
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
DRI failing the 200 DMA and under today’s low fails the 50 DMA with a risk to today’s highs
DE Risk against the 50 DMA at 91.70 if beaks todays low
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
LNKD Has to break S1 and today’s low with a risk for swing to over the 50 DMA or 166.16
Bye For Now!
