Nobody can argue with the strength of the overall market-well, some naysayers of course can-but lately, their platform is on the subway wearing vest signs that read, “The End is Near.” Now, that’s not to suggest thatWall Street is just giving away money. Few sectors/groups have had continual upward momentum, as many are tough to stick with unless one position sizes to pad the noise with super wide stops or daytrades the momo plays, exiting at the end of the day, with the understanding they could lose ground should that instrument gap much higher the next day. As we head into the upcoming week, continue to keep eyes on thesmall caps, interest rates, real estate and financial sectors. And even those indicators I have relied on are mixed. Real Estate and the TLT (20+ Year Treasury Bonds remain in bearish phases. The Russell 2000s are bullish, but have not joined their brethren to new 2013 highs. The Financials rocked last week, closing on new 2013 highs. I’m hardly suggesting you’ll find me on the subway platform anytime soon, but I do advise one keeps track of the market diversity. Follow the leaders and do not try to pick bottoms on the laggards. They will be first to collapse should the picture change.
S&P 500 (SPY) Getting overbought here in nosebleed territory. That means digestion/small correction is around the corner. Longer term-I wrote a while back that based on the monthly chart formation, a measured move to 220 is very possible. Subscribers: Positive Pivots in all
Russell 2000 (IWM) 111.62 high from October 29th. 109.50 support
Dow (DIA) Not so overbought as the others, but big 3-day move might be a tough act to follow out the gate on Monday
Nasdaq (QQQ) When climbing Mt Everest, the worst thing to do is look down. That’s what our subway doomsday sayers do
XLF (Financials) New highs and very promising for 2014.
SMH (Semiconductors) The gift I wrote about and really, not too late
XRT (Retail) Besides Kohls (down this week), the retailers are enjoying the gains
IYT (Transportation) Just 2 weeks ago we were talking about a reversal candle. Now, new highs.
IBB (Biotechnology) After looking so tired, I now see the potential double bottoms from early October and early November.
IYR (Real Estate) Inside day under the 50 DMA-eyes here
XHB (Homebuilders) If can clear 31.40 will see 32.50 but for now, might need some digestion
XLE (Energy) Made new 2013 highs. Highest high since 2008
XOP (Oil and Gas Exploration) Last month this matched the 2008 highs then retreated-now that is good resistance until it clears-then it becomes a huge cup and handle
TBT (Ultrashort Lehman 20+ Year Treasuries) TLTs inside day under the 50 DMA-eyes here
FCG (First Trust ISE Reserve NatGas) Looks poised for Monday
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) N/A
Category 2: (Pipeline)N/A
Category 3: (Double Up) Positive Phase, Condition 1 through 4, Positive Pivots which means can eitherbuy 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)
USG confirmed bullish phase. Like to see it hold the 50 DMA now
BBY Inside day. If Friday’s low holds, then could see another push up especially if clears 44.66
BID Besides having a record art sale, this has an inside day and improved in condition to a 3. Like to see it clear 52.45 and then hold 51.60 area for a miniswing trade
CCL In for a swing but like even better over 36.32 recent highs. Has gap to fill to 37.65. Crossing the 80 monthly moving average
AMPE Inside day with super tight risk under the 50 DMA
MCHP IN 2007 made a highs of 42.26. Then crashed down to 16.00 and this year, worked its way back to make new highs at 44.10. If that level now clears, looks very good longer term
INTC If holds Friday’s low then clears 24.62 could see more upside, even the possibility of new 2013 highs now at 25.98
Phase Change:
CNX If gaps or works its way higher early, great. If not, will need more work/time
IGT Inside day and like that it is hanging around these levels. If can get back over 18.00 will add.
MTW Came alive at the end of the day. A fave of ours going into Monday provided it holds Friday’s low.
PLD Inside day right under the converging moving averages. Also a fave over 39.35 risk to under Friday’s low
Shorts:
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
EBAY Provided 53.60 doesn’t clear, this looks like it could go much lower longer term, especially if breaks the 2013 lows
REGN Inside day. Risk to Friday high and still looks destined for the 200 DMA
KOG Inside day and cannot clear 12.32. Looks heavy to around 10.00
WFM If cannot clear around 60.14 looks heavy to the recent lows and perhaps lower
Bye For Now
