I just love when the metaphors work out. Call it poetic justice! My query Tuesday night was thus, “So, if the sheep are grazing in the meadow, the horses are bearing gifts, where are the wolves hiding?” My answer, “Like a hungry wolf shrewdly plotting out how to present as a sheep, these internals heed consideration.”
Current Market Internals: Advanced/Decline, Up/Down Volume Ratio and the McClellan Oscillator, which had all turned negative coming into this week, on Tuesday turned neutral meaning they remained technically in a sell signal. Wednesday, they became more negative once again especially given the weak performance of the Russell 2000s.
To be fair, although we expect the herd to run for shelter from time to time over the next several weeks, we equally do not expect any real slaughter, perhaps asacrificial lamb or two, but that’s it as this year draws to a conclusion.
The Russell 2000s broke the November 5th low, yet held the 200 DMA. TheDow, NASDAQ and S&P 500 retreated from the highs, but defended the fast moving averages.
Really, best advice I continue to hold onto myself is where I began the week- “Although there always will be pockets of specific sectors and/or instruments that defy the norm, overall, 2014 will conclude evoking the 2015 animal spirit of the sheep, quietly grazing on the hill. Furthermore, “Do not hyper focus on the intraday market ticks, continue to take profits and trail up stops on existing positions. Moreover, execute new trades (if you are an active investor) using much shorter timeframes (day to miniswing) on new longs and hedge with short setups.”
S&P 500 (SPY) Seen these doji days near highs before. The delay from following IWM’s lead? Maybe. Subscribers: Negative Pivots in all
Russell 2000 (IWM) 114.05 the 200 DMA. Now has major resistance 116.75 as well-in the middle noise
Dow (DIA) Doji and unchanged-like SPY, maybe a delay in selling of maybe not
Nasdaq (QQQ) 102.40 support to defend
XLF (Financials) 24.15 needs to clear
KRE (Regional Banks) Washout of longs but held good support levels-like again over 40.00
SMH (Semiconductors) no harm done
IYT (Transportation) Now would be a good time to see this come back to the highs
IBB (Biotechnology) Quiet
XRT (Retail) Held up well and still poised
IYR (Real Estate) Held 75.00 for dear life
ITB (US Home Construction) Hovering at recent highs for 6 days and counting-merits close eyes
GLD (Gold Trust) If it weren’t for last Friday I would think this action negative. Instead, it was logical to see sellers after that move
USO (US Oil Fund) 28.10 now a weak but mentionable double bottom if holds
XLE (Energy) Might as well wait for the 50 DMA
UNG (US NatGas Fund) Tried the 200 DMA intraday and didn’t close above it
TAN (Guggenheim Solar Energy) Subscribers: Decided to wait for a phase change
TBT (Ultrashort Lehman 20+ Year Treasuries) TLTs 120 pivotal area and the 50 DMA to hold 118.17 (notice the slope moving up?)
EWW (Mexico) Subscribers: Big day there-worth watching
JO (Coffee) Subscribers: Unconfirmed phase change to bullish
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: N/A
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)
LEN If holds 45.10 still like if setups for a daytrade add
RAX 42.45 max risk for a minis should this come in over 43.10
MPC Like if holds 93.39 and clears 95.00 for day to miniswing
ROST Good comeback and over the 10 DMA 81.77. If that holds have a good day to miniswing setup
PEP Flagging with support at 97.40 and over 98.55 could see more upside day to mini
Category 4: N/A
Phase Change:
FNSR Reports December 4th 16.71 max risk (some options buying lately) and over 17.23 clears resistance for swing
BAX Over 72.53 clears the 200 DMA and has to hold today’s lows for swing
GT Confirmed phase change back to Accumulation. Has to clear 26.00 hold 25.30 for swing
XOM Defended 93.85 several times and close over the 50 DMA each time. Now, 95.75 could see another push to the 200 DMA and beyond
KSS Over 57.65 like for a swing against 56.74 the 10 DMA
CYH Inside day so slingshot remains good against 46.47 and has to clear 49.02
AMZN Inside day. Tried but didnt clear 328.35 the 200 DMA-if does good risk to today’s low of day for miniswing
GLPI Like if holds 31.88 and better over 32.23
Shorts: Have a few on the focus list (QIHU TCK FB)
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
WYNN Inside day. 181.84 is resistance with under 179.33 break could see move down to 172.00-minswing
Category 6: N/A
Best Best wishes for your trading,
Michele Schneider
