Amazing how fitfully we rest when the market climbs off the lows and marches to new highs versus how worried we become once the market achieves new highs.
Tuesday night, I wrote about 7 theories that could potentially have an impact on what happened as the week progressed and Wednesday night, I wrote about theAdvanced/Decline signal which presented a warning in SPY (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.)
But, I also highlighted the possible distinction between the peak in September in the IWM or Russell 2000s as compared to what might occur this time if theIWMs held up over that September high 117.80. Clearly I had company, lots of it, as Thursday’s session unfolded.
Russell and his 2000 friends were quite naughty, scaring the bejeezus out of lots of longs while the overripe Apple moved to another new high!
Apprising the situation, although we see a possible reversal pattern from a new 60-day high in IWM given the weak close, it did hold support around 116.50. How it closes on Friday should be important. A move back over 117.37 good, over 117.80 great, and a failure of 116.50, enough of a reason to tighten stops big time on existing longs and pretty much avoid putting on any new ones, with consideration of some type of hedge-perhaps the volatility index or short a tired sector short-term such as Biotechnology. I frown upon selling weakens in instruments already beat up.
Speaking of which, I sat with leg warmers on in our office today. A good portion of the US readies for freezing temperatures and the first snow of the season. Perception can change on a dime-low demand and an oversupply of oil can quickly become, WHAT DO WE WANT? OIL! WHEN DO WE WANT IT? NOW!
S&P 500 (SPY) 202.50 the fast moving average with an interesting doji day after making new highs Subscribers: Positive Pivots in all except IWM
Dow (DIA) Doji day after making new highs
Nasdaq (QQQ) New highs again (multi-year)
XLF (Financials) Held on which is encouraging
KRE (Regional Banks) Inside day
SMH (Semiconductors) Semis are not needed at this party, but, still like to see them clear 52.00 on a closing basis
IBB (Biotechnology) Held where it needed to for now but a place to look for shorts if market weakens
XRT (Retail) Made a new high then sold off a little but not catastrophically
IYR (Real Estate) 75.00 support
ITB (US Home Construction) Hovering at recent highs
GLD (Gold Trust) Looking for 113.15 and over
USO (US Oil Fund) 30.00 key point to clear
OIH (Oil Services) Check out the last 30 min bar if you can
TBT (Ultrashort Lehman 20+ Year Treasuries) TLTs 120 pivotal area and the 50 DMA to hold 117.75
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:
KMP 5 days negative pivots with close risk now to 93.75 and has to clear R1 94.75 for swing
KSU Inside day with risk to around 123 if clears 125.31-looking for new highs miniswing
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)
APD These formations typically mean it has to clear 136.23 and til then, chop-but did hold the 10 DMA at 134.60 as a point of risk
BMRN Held up well with 88.23 the recent high in its midst for a day to miniswing
BBY Reports November 20th. Worth watching for a daytrade if clears 35.65
CENX Over 28.04 clears the 10 DMA for a good day to mini maybe even swing
LNC Inside day near the highs of 56.52 if clears like for a move against 55.30 risk swing
LEN 2 Inside days so in spite of our tail position, can look at an add on a day to mini over 46.14 with risk to 45.38
Category 4: N/A
Phase Change:
GT Unconfirmed phase change to accumulation. Risk 25.35 and like over 25.50 for swing
IGT Inside day. Cleared the 50 DMA-look for an ORR against 16.63-mini to swing
SFM Over the 50 DMA which makes todays’ low a good swing risk if clears 30.30-swing
BID If holds 40.00 and clears 41.74 in an unconfirmed accumulation phase with chance to see 42.00 or perhaps higher-day to mini
SODA This is a Mish trade-see a basing action and if we are patient but disciplined, could have a nice payout
XPO So oversold, if this clears back over the 50 DMA still like it clears the 50 DMA 37.31 for swing
Shorts:
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
JOY Resistance 53.30 and looks like an ORR good possibility rather than selling weakness-daytrade
NFLX Inside day 385.50 risk with needed volume to get this to break 376 once and for all
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 low
QCOM If cannot clear 71.07 and breaks S1, looks like it will continue south
Best Best wishes for your trading,
Michele Schneider
