The Dow and NASDAQ began Friday’s session with a breakaway gap (a jump and hold over recent price activity). Question on everyone’s minds after the volatility swings last week is whether this was a Runaway or Exhaustion gap? Runaway and the fun is just beginning. Exhaustion gaps tend to happen at the end of a prolonged trend. But, with all the ups and downs and sideways action, not sure how “prolonged” I would interpret the trend to be. Therefore, I am guessing more “Runaway” with some other layers to watch. One, the Russell 2000 which cleared the March 15th high intraday, but did not close above it. Secondly, how well/poorly the bonds act next week, especially after a no-change policy on rates by the FED, but a possible “bubble” back in the works.
Just had to share a couple of quotes From Subscribers:
“Mish, I just wanted to let you know how terrific your stock picks and education has been over the last several weeks. I have been busy at my practice so can't pay too much attention to the markets during the day. However, I keep tweetdeck on and I am loading selections from your daily picks into the robots with pretty astonishing results. Over the past several days have 7 long positions on and all have reached 1.5 atrs!” Dr. Len Z.
“Sorry to keep repeating myself, but I just have to say it again... thank you. Every day I learn from you. You are simply an amazing teacher. I am slowing getting to know myself and the kind of set ups I like as well as the risk I want to take….. I hope that every other trader out there finds you as a mentor, you are simply the best. “T. Ho
S&P 500 (SPY) A doji day after the strong open. We went into Friday thinking 162 and the high was 161.88. Provided 159.780 area holds, watch for more upside Subscribers: Pivots positive in all indexes
Russell 2000 (IWM) 94.96 was the March 15th high and today, it made a new high of 95.47 but closes under the old high for 2013. So, unlike the others, no runaway gap which could or could not be significant. Watch Friday’s low as super important to hold
Dow (DIA) Breakaway classic gap. Typically, you do not want to see this gap filled for quite some time.
NASDAQ 100 (QQQ) Comments going into last Friday: “Now, am ending the week making the bold statement that this index is just getting going”. Ha. Subscribers: Not seeing this overbought so unless there is a gap down, still very bullish here
ETFs:
GLD Would not have expected this to run with the market, but it did hold up rather well. Subscribers: Which is why we are still watching the mining stocks for possible bottoming formation.
XLF (Financials) Another breakaway gap. Subscribers: 3 ATRs is 18.98 form our entry
IBB (Biotechnology) Nearly 100% overbought on the weekly Relative Strength Indicator now. But, the rest was indeed short-lived. However, this is one where an exhaustion gap seems more plausible.
SMH (Semiconductors) Hello! But we have started now to take some profits, holding core.
XRT (Retail) New highs again not only possible-done and done.
IYT (Transportation) If 110 holds has room to recent highs and higher
IYR (Real Estate) Wrote coming into Friday, “for end of week, not expecting this to be the leader.” True, but see this more as some fatigue rather than a top
USO (US Oil Fund) Gap over the 200 DMA making that now support
OIH (Oil Services) Far from the 2013 high but did break the lower highs trend and still very friendly here Subscribers: 43.82 the 80 monthly moving average
XLE (Energy) 80.14 the 2013 high
TBT (Ultrashort Lehman 20+ Year Treasuries) Exactly what I tweeted about all week-the key reversal after the flush day last Wednesday; will be watching for a dip to buy. Subscribers: Opening Range Reversal good to watch for
XOP (Oil and Gas Exploration) Looks better away from the 200 DMA but Unconfirmed change phase to bullish Subscribers: Been liking this all year, now will see about a low risk entry if confirms the bull phase
XHB (Homebuilders) A gap up but not breakaway. Subscribers: Not my first choice now as place to look for new long entries
UNG (United States Natural Gas Fund) Subscribers: Classic technical analysis. This chart shows a golden cross on April 15th, big move already happened. Then, big drop down on Thursday; then on Friday touched and held the 50 DMA. Trading with the trend, will look for a long entry against the 50 DMA. Negative pivots so has to cross R1 and Friday’s high.
SGG (Sugar ETF) Subscribers: Inside day. Would consider an add if clears last week’s high.
FXI (China) Subscribers: Took off some at 1.5 ATRs. Playing out the balance
RSX (Russia) Subscribers: Now at the 50 DMA and overhead resistance
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: Decided to clean up the list and look only for new names or old ones I still really,really like. The picks worked great but having a sense of diminishing returns as we start the new week. Hard to find new setups after the monster move so patience until new setups emerge.
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:
NOW Closed above the pivots but still has a negative stack to the FTP. However, can watch for an opening range reversal to control risk to 39.95 or a breakout since not overbought over R1
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)
BWA Not my normal type of trade, but over 80.10 new highs for 2013 with risk to Friday low and could see 87.45 the 2011 high
CREE ORR preferred now against Friday low.
F Friday rallied above recent resistance which means a continuation or reversal is fine. 2013 high 14.30
Category 4: (Rip Tide)N/A
Phase Change:
NTAP Reports May 21st Another move back over the 50 dMA so if it holds 34.20, then still has a shot at making a move up ahead of earnings
URBN Reports May 20th. Has to clear 42.00 and hold Friday’s low for a possible bounce ahead of earnings
AEM Held S1 and Keith likes the bottoming potential so now watch for a move back over 32.00 and eventually, a close over 32.20
ADSK Reports May 16th Unconfirmed phase change to Bullish if holds Friday low. 41.00 recent highs or above which could see ahead of earnings
KSS Reports May 16th Unconfirmed phase change to recovery and real close to the 200 DMA. Would consider an ORR or breakout over the 200. Long term like the bottoming formation but will have to exit before earnings
SWC A 2013 pick that had some issues now back to unconfirmed bull phase. Like on ORR or breakout as it sits over the 80 monthly moving average
Shorts:
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
VRX If the biotechs sell off, this after an inside day, could drop if breaks the 50 DMA and Thursday low71.99
FB Possible slingshot high with 29.00 max risk and support down around 27.00
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
CRM Reports May 13th. Has to break S1 and Friday’s low and not clear 42.67
Bye for Now!
