“Sell the mighty or buy the meek? Buy the strong and sell the weak? Only the most experienced and flexibletraders should know what to do now.”
I wrote that last night, but that is not fair since even the most experienced traders-Paul Tudor Jones for instance, are baffled by recent action.
Again, with the DOW up and the Russell 2000 down, this is either a scalper’s market or one where you give yourself a lot of room and reduce position size.
One note though-the interest rates did firm Thursday making the case for the blow off top in the TLTs better. And, the Euro (FXE) has a possible island top (needs another day to confirm.) Semiconductors marginally held over the 50 DMA-again-one more day needed there as well.
If the trend towards a strengthening dollar and higher rates is beginning, expect to see even more shifting relationships. Time to think about what will benefit and what will suffer from that change.
S&P 500 (SPY) Doji day on the 10 DMA holding the 50 DMA which it needs to continue to do Subscribers: Positive in SPY DIA QQQ with IWM Neutral
Russell 2000 (IWM) Could not hold the move over the 200 DMA and now under Wednesday low, see 107 area
Dow (DIA) Made a new high by one cent and close ok-not a reversal pattern-will become one though if it breaks and closes below Thursday’s low
Nasdaq (QQQ) Can’t get through the 50 DMA and seems more attracted now to the 200 DMA
XLF (Financials) Tried the 50 DMA but couldn’t cross it on a closing basis. Under 21.70 trouble
SMH (Semiconductors) If there is any group that has a chance to show it can improve the market breadth, it’s this one-has to stay above the 50 DMA one more day
IYT (Transportation) Has some overhead, but in good shape still. This could benefit from a stronger US dollar
IBB (Biotechnology) Closed right on the 200 DMA-tomorrow’s direction is most likely good to follow
XRT (Retail) Failed the 50 DMA with a bizarre looking hammer candle
IYR (Real Estate) New highs and might be at least running out of steam-doesn’t mean that is a negative though
GLD Closed unchanged but under the major moving averages-
USO (US Oil Fund) Confirmed phase change to bullish
OIH (Oil Services) Possible topping action
XLE (Energy) Possible topping action
XOP (Oil and Gas Exploration) Gave it up today after a lot of consolidation
TBT (Ultrashort Lehman 20+ Year Treasuries) 64.00 has to clear
UUP (Dollar Bull) Subscribers: Needs a second day to not fill gap to 21.18 for a confirmed island bottom
IFN (India Fund Inc.) Subscribers: Out of this trade with the break of the 50 DMA
EWP (Spain) Subscribers: Watch for a topping candle possible
CORN (Corn) Subscribers: Over 35.25 should continue up
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:
BA Has to clear Monday’s high 132.38 and hold 129.50 and then has no resistance until it fills a gap 135.65
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)
ADP If 76.95 holds, like this as well but also needs to clear 78.35-
HUN even the steeliest of traders these days are jumping ship before the stop-pivots positive tomorrow so might try again-24.90 is rock bottom support. And might do ½ position and give it room down to the 50 DMA
DOW Still watching this if today’s low holds
AON Inside day. Would give it 85.10 support if tales out 86.82
PLD Want to see this hold 40.80 now and clear 41.62
PFG If today’s low holds, here is another contender to maybe 50.00
Category 4: (Rip Tide)N/A
Phase Change:
VXX Interesting that it is at historical lows when the market is so disjointed. Therefore, might put on a swing position over 39.58 and risk to today’s low 38.23
Shorts:
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
CBST under the 200 DMA with a super tight stop at 69.63 and under 65.95 or S1 if IBB breaks, could see a good day to miniswing trade
EXPE Looks heavy if cannot clear 70.43. Also watching TRIP FB TWTR as possible shorts since they could have just had a quick bounce today to sell into.
OXY 95.66 resistance with now, a move down to the 200 DMA seeming likely. I’m even thinking this could really tank down to the 80 monthly over time. Probably prefer an OR high failure for risk control
Bye For Now!
