With our temporary New York apartment setup, we see the mouth of all the waterways that converge in lower Manhattan before the water continues its journey to the west side up the Hudson River.
The currents change directions and run in several ways simultaneously. Basically, our view is the perfect metaphor for the current market situation.
For consistency sake, let’s begin with an examination of interest rates. Over the weekend, I wrote that we would begin to look for signs that the double the average volume on the move to new several month highs in theTLTs might be the beginning of the end of extremely low rates.
It would be premature to say that rates bottomed Monday. But it would be fine to say that following the path of volume signals, the possibility is strong.
Secondly, we have been writing a lot about the diversion in the phases of the indices. The S&P 500 and theDow are in bullish phases, protecting that 50 DMA like a lioness early on in the session. NASDAQ is in awarning phase although impressively closer now to the 50 DMA than I would have ever imagined as of 9:30 Monday morning! The Russell 2000s have been skidding along the 200 DMA, a beacon of warning, and even after they rose from the depths on Monday, still remain very much a concern.
If we investors are the sailboat in the mouth of the NY Waterways, we have had fits of rails in the water andsmooth seas. But, we are afloat!
What we need now is cooperation from sectors and groups. All (excluding commodities) are in warning phases with the exception of Transportation and Real Estate. If the salient ones (Financials, Semiconductors, Retail, Biotechnology and Homebuilders) can get moving, the old “Sell in May” hackneyed phrase will go the way of the Basilosaurus for the second year in a row.
S&P 500 (SPY) 186.43 bottom line low to hold with a move over 189.14 promising. Subscribers: Pivots Negative
Russell 2000 (IWM) We really need to see this clear 113 now once and for all or the 200 DMA is right there
Dow (DIA) 163.30 support with 165.85 point to clear
Nasdaq (QQQ) Clearest place to watch is the 50 DMA which it has not cleared yet. Is it muscling up to take it out, or was that the test? My question on Friday-Its beginning to look a whole lot better!
XLF (Financials) 22.00 and over the Promised Land or another thorn
SMH (Semiconductors) 45.00 the point to clear and important that it does
IYT (Transportation) 137.25 was defended on Monday-as a start-now over 138 better
IBB (Biotechnology) Actually a nice move away from the 200 DMA
XRT (Retail) Held the 200 DMA but under the 50 DMA-another one for the list to see which moving average it clears or breaks first
IYR (Real Estate) A bit late if new to this group, but still comforting to see
XHB (Homebuilders) Held the 200 DMA
GLD Between the 200 and 50 DMAs but still no major feel here
USO (US Oil Fund) When I look at the weekly chart it looks good, provided it holds 35.98 Subscribers: I am interested in this group tomorrow over 36.50
OIH (Oil Services) Sideways near the highs
XLE (Energy) Sideways near the highs
XOP (Oil and Gas Exploration) Certainly holding near the highs
TBT (Ultrashort Lehman 20+ Year Treasuries) Inside day and potential reversal pattern
IFN (India Fund Inc.) Subscribers: holding on
EWP (Spain) Subscribers: Good performance
CORN (Corn) Subscribers: Almost added today but sill as the 10 DMA to clear
BAL (Cotton) Subscribers: Inside day and right up to the 200 weekly moving average-worth watching
JO (Coffee) Subscribers: Has to clear the 10 DMA
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:
CPN If today’s low holds like over R1 and today highs for a continuation up
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)
PLD If this clears 41.26 will add to our current position and use the recent lows as a stop
HAL If this holds 63.40 then look for a good entry with next leg up possible for a miniswing trade
HUN Has negative pivots but if holds today’s low and clears R1 25.65 looks good for a swing
HCA Over R1 like with risk to 51.64 for a miniswing or maybe hybrid swing
TEVA Inside day good risk to today’s low with a move over 51.10 R1, a good entry level
DOW Has to clear 49.95 and hold 48.50 area for a swing
Category 4: (Rip Tide)N/A
Phase Change:
MGM Inside day on the 50 DMA which means over R1 first then Friday high, since cleared the 80 month moving average, can see more upside
YHOO Inside day right over the 50 DMA-like over 37.12 with risk to 36.50
YELP Good volume after last week’s reversal-now, over R1 clears the 10 DMA and like for swing trade
AON Over 86.00 clears recent congestion and then the risk to 84 makes sense
KORS Reports May 27th. Cleared the 50 DMA. If today’s low holds, then could see mover upside.
ANF Like this one especially over R1 and today’s highs with a trendline breakout over today’s high. Risk is today’s low
Shorts:
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
IOC Broke the 50 DMA which means has to stay under 63.00 with an inside day. Has room to 52.70 the 80 month moving average
EBAY More day to Miniswng trade now but still looks weak
Bye For Now!
