Most likely, in the next few weeks, you will have to endure the horse, sheep and wolf metaphor to possible ad nauseam levels. But for good reasons. After writing this on Sunday, “2014 will conclude evoking the 2015 animal spirit of thesheep, quietly grazing on the hill,” I began this week with that thought in my mind. Sheep make wide circles when they graze as long as there are no wolves nearby.
The market certainly behaved as thus, rambling about, chewing and digesting without much fear, with what appears to us as random action. The metaphor in turn, facilitated keeping us in our current positions, without hyper focusing on the intraday ticks! A theme, I suspect, we can hold on to at least through mid-week.
What would make the market run for shelter? Seems the US has shrugged off the Japanese recession, Putin’s early exit from the G-20, the sad news about the doctor dying from Ebola in a Nebraskan hospital, the threat from certain Republicans on shutting down the government if POTUS signs an executive order on immigration reform, and the NY Giants losing their last 5 games in a row.
In fact, even with the small caps taking out the 116.50 support level yet holding the November low 115.28, the Dow led the way with SPY neck and neck.NASDAQ fell with the pressure of social media stocks while AAPL had a reversal after the early strong start closing lower but holding well above 110-critical support area.
Healthcare, Gold Miners, and Natural Gas had the best gains. We are very much attentive to solar energy and 3-D printing. All could be basing after doing very little throughout 2014. Those sectors just might hold the Ram’s head position as this year concludes and 2015 begins.
S&P 500 (SPY) Although this looks good, continued caution in the Market Internals: Advanced/Decline, which has turned negative along with the McClellan Oscillator, and Up/Down Volume Ratio. Subscribers: Positive Pivots in SPY QQQ Negative DIA IWM
Russell 2000 (IWM) 115.28 the November low to defend and now must really get back over 116.75 to look healthy
Dow (DIA) Resting near highs
Nasdaq (QQQ) Doji day near highs with 102 big area of support
XLF (Financials) Held 24.00 yet didn’t clear 24.10-in the middle can go either way
KRE (Regional Banks) Correcting with no major damage done
SMH (Semiconductors) Inside day and has to clear over 52.30 to keep going
IYT (Transportation) Decent correction from the highs
IBB (Biotechnology) Inside day though unless it takes out 293 again, still on the weak side
XRT (Retail) 89.80 is the support to hold IYR (Real Estate) Back over 75.00-a pretty reliable swing area
ITB (US Home Construction) Hovering at recent highs for 4 days in a row
GLD (Gold Trust) Digestion as expected and held well. SLV too
Metals and Mining (XME) This did ok but GDX did better
USO (US Oil Fund) 2 Inside days making this worthwhile to watch for range break
XLE (Energy) Inside day
FCG (First Trust ISE Reserve NatGas) All about UNG today
TAN (Guggenheim Solar Energy) Subscribers: Eyes are on this for some more reason to think bottoming
TBT (Ultrashort Lehman 20+ Year Treasuries) TLTs 120 pivotal area and the 50 DMA to hold 117.95
UUP (Dollar Bull) Inside day and did not confirm the reversal candle so still looks good
CORN (Corn) Subscribers: Like this again over 26.57
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:
LNC Has to hold 55.75 and clear 56.33 for mini to swing
LEN If holds 44.60 like over todays high for an add to our long daytrade
XRX 13.36 max risk with a move over 13.57 better for a mini to swing
RAX 42.50 decent risk for a possible day to miniswing trade if clears 43.20 then 43.77
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 136.23 clears the highs after an impressive inside day. Risk 134.75 for miniswing
DG Made the range in the first 30 minutes. Now, if holds 64.35 see a good move over 65.61 for a day to mini
AA Inside day. Over 17.00 like for swing with risk 16.58
Category 4: N/A
Phase Change:
CYH Reversal with volume for a phase change to warning (improvement). Has to confirm over 46.93 and hold 45.40
AMZN Inside day. Like 215 max risk and over 328.57 clears the 200 DMA for mini to swing
YOKU Inside day. 22.64 is the 200 DMA to watch for a clearance. Then risk is to low of that day mini to swing
XOM Held the 50 DMA risk to 94.50 if clears 95.43 for swing
DDD Confirms the slingshot and now a favorite if holds today’s low 34.48
GLPI Inside day and like to see this hold today’s low and clear 32.14 for a miniswing trade
CLF Unconfirmed phase change to recovery so now needs to hold today’s low 10.29 and clear 10.90 for a new swing
INTC 33.76 max risk and prefer a miniswing for this now on an ORR
Shorts:
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
QCOM 70.78 now resistance with more downside expected-can do a mini to swing trade
NFLX 378. 13 breaks S1 with risk to 387 or 384 for closer one
Category 6: N/A
Best Best wishes for your trading,
Michele Schneider
