If you look at the daily chart prices, no real damage was done. After all, the S&P 500, NASDAQ and the Dow all held the fast moving averages. The small caps or Russell 2000s however, broke the fast moving average, had a distribution day in volume and confirmed what now looks like a reversal candle from the highs. That’s the bad news. The good news is that IWM did not gap lower, leaving an island top. So, no execution. Rather, the run-of-the mill haunted house, with what could be a slow death and the real possibility of a stay of execution, most likely granted by the Federal Reserve.
S&P 500 (SPY) I like old highs as support areas to watch-here it is 173.60 unless we clear Thursday’s highs. Subscribers: Pivots negative in all indices
Russell 2000 (IWM) Filled the gap therefore no more runaway. That takes the wind out of the sails, but as mentioned-not a death sentence.
Dow (DIA) 154.85 is the 10 DMA
Nasdaq (QQQ) An open beneath 82.48, will help clarify why we began this week with only a few positions and end the week mainly in cash.
XLF (Financials) I use to write that without Semiconductors at the party, I wouldn’t stay too long. Now, I say the same about the financials.
SMH (Semiconductors) 41.44 is the recent high to keep this going. 40.73 is where you want to see this hold
XRT (Retail) 83.20 is the support to hold here and with an inside day, besides semiconductors, a place to look it if market firms.
IYT (Transportation) Has work to do after toppy candles
IBB (Biotechnology) Once again and 4th time this year, this is about to show if it can hold or if will break the 50 DMA
IYR (Real Estate) Weak, but approaching oversold close to the 50 DMA
XHB (Homebuilders) This tells a story too. Will it hold the underlying major moving averages?
GLD Nasty gap down. If holds 126.60 maybe ok, but if not, back to the negative bias
USO (US Oil Fund) Confirmed phase change to Distribution
OIH (Oil Services) Doji on the fast moving average.
XLE (Energy) Inside day-interesting one to follow the range up or down
TBT (Ultrashort Lehman 20+ Year Treasuries) Choppy, indecisive. Hey, sounds like the Fed!
UUP (Dollar Bull) Confirmed bottom which I hope some of you took advantage of as I have been writing what to look for all week
VNM (Vietnam) Subscribers: Interesting action today. Will keep me interested over R1 tomorrow
URA (Global X Uranium) Subscribers: Over today’s high and R1 line up-also one to watch tomorrow
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:
TEX We are in this now with a wide stop. But, will consider trading around the core position if this takes out R1 and today’s high. Now, our swing stop should suffice given position sizing
RCL After runaway gap, corrected last 4 days. 41.40 is gap low and best risk. Over pivots looks good, over R1 better and over today’s high even better.
ATI If today’s low holds, then a candidate if crosses above the pivots, then R1. Lots of room here longer term
JAZZ Reports November 7th so miniswing trade. Has had 5 days under pivots but closed green and holding the 10 DMA. Today’s low max risk with R1 today’s high line up.
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)
SPLK If holds today’s low, even with slightly negative pivots, if clears R1, then could still have more to go after it takes out recent highs
AAPL 2 inside days but really, will watch for a break in either direction.
IR Inside day-max risk in this environment is 66.70. Over 68.30 Wednesday high could see a new leg up
Category 4: (Rip Tide)N/A
Phase Change:
CVX Reports before the open. If this reports well, then over 121 worth a try since it will clear 3 converging moving averages
Shorts:
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
COH Broke S1 but closed above it. Now, pivots negative so watch again for a new short
Bye For Now
