My husband, Keith Schneider, CEO of Marketgauge and my partner in our hedge fund, typically does not sit in front of computer screens all day like I do. At one point during today’s session, he made a cameo appearance and quietly said, “Vix futures demonstrating market is at irrational exuberance.” “Hmmm,” I thought. “Where can I find other signs of deterioration while the Dow-hello-is making new highs? I know, I will look at the Russell 2000s!” 111.62 is the 2013 high made on October 29th. The next day, it sold off hard, dropping to the 50 DMA over the next several days, finally turning around on November 8th and then rising in price until today when it reached a high of 111.42. Twenty cents shy. That’s where I looked until I saw the TWEET! Carl Icahn-AAPL-Bearish in the market- NASDAQ-reversal from new highs-bye bye-new highs in the small caps, Dow and the S&P 500. Gone in 60 seconds. Of course, all reversal candles, price and chart patterns need second day confirmations. However, the recent action could be self-fulfilling in scaring traders enough to stay sidelined and nouveau bulls to liquidate. We shall see.
S&P 500 (SPY) “Getting overbought here in nosebleed territory. That means digestion/small correction is around the corner.” Words of the prophet. 177.70 the fast moving average to defend Subscribers: Negative Pivots in all. SDS huge buyer of January $33.00 calls today. Not quite a slingshot.
Russell 2000 (IWM) Subscribers: TWM the ultrashort did make a slingshot low if it confirms over 13.56 tomorrow, the 10 DMA
Dow (DIA) Best bet to hold up or go sideways. But if this cannot, not good for the others for sure
Nasdaq (QQQ) When climbing Mt Everest, make sure you don’t look down alright. Ouch. 82.70 was my number last week. Still watching that area to see if it can hold.
XLF (Financials) Still best bet to keep the party rolling
SMH (Semiconductors) At first it looked like a gift since the highs were still a bit from reach. Today, it looks like a possible bearish engulfing pattern, except it these lows hold, not so bad
XRT (Retail) Looking for a confirmation that today was a top for awhile
IBB (Biotechnology) Once again, closest to the 50 DMA but more like a range with October and November lows the bottom and September and October highs the top.
IYR (Real Estate) One of my top four areas to look at and this had a bad day
XHB (Homebuilders) Called for digestion-getting it
GLD 121.85 support or this will head further south
USO (US Oil Fund) This also looks pretty awful
XLE (Energy) If you can’t count on new multiyear highs for much-makes everything under suspicion.
XOP (Oil and Gas Exploration) First to exhibit the nastiness on Monday. 66.00 support
TBT (Ultrashort Lehman 20+ Year Treasuries) TLTs explosive after inside day. Now the 50 DMA is within its reach
IFN (India Fund) Subscribers: Should this hold 20.05 could be worth a look
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:
JWN Inside day and if the 10 DMA holds 61.75, then over the pivots looks better and over R1 better still
PEP Today’s low and the 10 DMA line up for support and over R1 lines up with today’s high. Still a contender
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)
BID 53.13 would be the area to clear now and today’s low has to hold
DRI Inside day and if holds the 10 DMA 52.50 area, then has potential to 55.25 the 2013 high
MCHP 41.81 is the low of the gap day. Pivots are negative, but it’s going sideways and worth keeping a look at-especially over 44.10
CLF Inside day. Over 27.86 looks much better and has to hold 27.20 area
INTC Now, ½ position and has to hold 24.30 clear 24.73, then, the possibility of new 2013 highs now at 25.98
Phase Change:
NTRS Inside day outperformed after a big correction, If clears 57.37 clears the 10 DMA and has to hold today’s low. Also over the 80 monthly
CVX 120.20 to hold and one more push over today’s high will clear the 50 DMA
Shorts: Coming into today the short list was great, but the market was making new highs. Now, watching the following: MOS RRC AAPL SCCO DVN VMW REGN and will tweet after the open if any setup well.
Bye For Now
