We have many different indicators we use to help us “see” market signs before they become super obvious-like telling folks the market is failing after it fails kinda thing.
Tuesday night, I wrote about 7 theories that could potentially have an impact on what happens from here. One theory I eluded to without much detail was “an anemic advanced/declined indicator, not to mention concerns on a market running rich.”
Back in September, as the S&P 500 made new highs, the Advanced/Declinesignal went to warning (when the number of stocks above the 10, 50 , and 200 Day Moving Averages go from plus 400 to under 400 in both the 10 and 50 DMA. That is what we consider a warning.) In September, it took another couple of weeks to see the S&P come off before its dramatic sell off mid-October.
One distinct difference though, could be the IWM or Russell 2000s. In September, they peaked and reversed, never taking out that peak high, then deteriorating long before the other indices did. If that does not happen and we instead see IWM continue to clear, hold and trade above that September high (117.80), perhaps the warning is no more than that-more of a point when we consider time of year as not one to push too much yet, certainly no reason to expect the market to cave.
I would expect any major hedge funds that are up for this year to begin to even up and take it easy as to not rock the profit sharing boat, regardless of what happens in the last 6 weeks of this year. Can you believe it? This year will be over before we know it. No more Year of the Horse as we look forward toThe Year of the Sheep. (Or as Robin Williams once repeated, “A time when men are men and sheep are nervous!”)
S&P 500 (SPY) 203.45 a good point to hold now with some expected sideways movement. Subscribers: Positive Pivots in IWM QQQs and Negative in DIA SPY
Russell 2000 (IWM) Beautiful bullish engulfing pattern and a close over 117.80-has to hold up
Dow (DIA) 175 good pivotal point of support to watch
Nasdaq (QQQ) New highs (multi-year)
XLF (Financials) A possible reversal candle but not that clean since this is holding the 10 DMA at 24.00
KRE (Regional Banks) Timing is everything and I have been writing about regional banks as the next hot thing over the big banks-today looked right
SMH (Semiconductors) Semis are not needed at this party, but, still like to see them clear 52.00
IYT (Transportation) Been a strong group-still is
IBB (Biotechnology) Held where it needed to
XRT (Retail) After 2 inside days-blast off to new highs for this ETF
IYR (Real Estate) 75.00 support
ITB (US Home Construction) Inside day so looks like more upside is possible
GLD (Gold Trust) Inside day so still looking for 113.15 and over
USO (US Oil Fund) Inside day and 30.00 key point to clear if going to hold
OIH (Oil Services) Still could be bottoming
XLE (Energy) 86.25 key support with 88.61 the 50 DMA to clear
XOP (Oil and Gas Exploration) Over 62.00 different picture
FCG (First Trust ISE Reserve NatGas) Over 15.75 much better
TBT (Ultrashort Lehman 20+ Year Treasuries) TLTs 120 pivotal area and the 50 DMA to hold 117.75
UUP (Dollar Bull) Strong dollar, strong retail-that’s a relationship that finally is catching up to itself
SGG (Sugar) Subscribers: Big move up to the 50 DMA-eyes here
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:
APD 2 Inside days which means follow the range break over 135.50 with risk for a miniswing best
BMRN 83.71 the 10 DMA swing risk and 85.45 closer risk needs to clear 87.80 R1
KMP 4 days negative pivots with close risk now to today’s low and has to clear today’s highs for swing
Category 2: N/A
Category 3: (Double Up) Positive Phase, Condition 1 through 4, Positive Pivots which means can either buy an 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)
BBY Reports November 20th. Cleared R1-now interesting daytrade over 35.53 or on an ORR
PANW Reports 11/24 2 Inside days so good for a day to miniswing trade if breaks over 109.59
CENX Over 27.98 clears the 10 DMA for a good day to mini maybe even swing
AAPL ORR now only
PAY Although negative pivots, now over 37.33 still like for a miniswing to swing risk to around 36.50
ABBV-Inside day and over 64 good day to mini
LNKD Inside day and if clears 232.30 like for a mini with risk to 227-229 target around 255
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:
XPO Even more Oversold on the 2 day RSI. Max risk 37.22 the 50 DMA. Like better over 38.19 R1.
Phase Change:
IGT Cleared the 50 DMA-look for an ORR against 16.63
OC ORR good now for sure
SFM Back over the 50 DMA which makes todays’ low a good swing risk if clears 30.20
SODA Inside day just under the 10 DMA so would try again over 21.90 with risk to 21.22 for a swing trade
ONVO Could be flagging if holds 6.52 and clears 6.96 for a swing
CLF We probed for a daytrade, but over 11.00 can try for a mini to swing using 10.40 risk
Shorts:
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
NFLX At some point this will go down I believe. 378.53 breaks S1
CBS Looks like a bear flag forming. If breaks 50.52 like for day to miniswing with risk 51.80
FB Still a possible short if fails to clear 75.00
Category 6: N/A
Best Best wishes for your trading,
Michele Schneider
