I haven’t written about life in a technical bubble in quite some time. I thought I had good reasons of course; let’s face it, the news around the globe on pretty much all accounts made the bubble seem more ostrich-like than usual.
However, as I surfed the offerings on NFLX over the weekend, I came across a documentary called, Tiny, A Story About Living Small (a new trend in downsizing one’s domicile); hence, my thought about the tiniest place a trader can live-inside the bubble!
The Tech bubble would have gotten us short the Dow on September 23rd after the reversal candles. On October 15th we would have covered the short, then on October 20th, it would have gotten us long.
Looking at the present, the Dow (DIA) made new highs early on, sold off from those highs, had a narrow trading range with less volume than it had last Friday (scant volume compared to its average as well). Clearly warrants a head’s up, perhaps a strong warning to new longs, but not a sell signal at this point.
The Russell 2000s could not match the September 3rd peak high; yet, corresponded with a 60-day high and close near the intraday lows as this week begins. The weak link of 2014, IWM merits close eyes as we head into midterm elections and a week chock filled with earning reports, economic data, concluding with the jobs report.
Then there are the QQQs or NASDAQ. That not only confirmed the runawaygap, but also left itself open to a reversal after making new highs.
What’s a resident of the tech bubble to do? DO vote, because as a US Citizen it is your right and your duty to do so, but DON’T watch the pundit’s remarks on the results and their implications. DO exit positions ahead of their earnings report but DON’T pay any attention to the economic data. As an alternative, DOlook for confirmation on aforementioned possible warning signals inside the bubble, and whether or not confirmation materializes, trade accordingly.
S&P 500 (SPY) Possible double shooting stars. Love this candlestick formation as it can really tell us whether a trend is about to go ballistic or go the way of the dinosaur Subscribers: Positive Pivots in all
Russell 2000 (IWM) Held Friday low which tells me Monday session more of a digestion-if it continues to hold 115.70 that is
Dow (DIA) 173 important to hold but really, looks ok even up here
Nasdaq (QQQ) Tech bubble-don’t argue with a runaway gap, unless this gaps under Friday’s low
XLF (Financials) Overbought and on new highs
KRE (Regional Banks) 39.70 should hold as this worked off some near-term overbought conditions
SMH (Semiconductors) Semis back with room to recent swing high
IYT (Transportation) If holds 155.90 still see new highs coming
IBB (Biotechnology) Rest more than a call for a top
XRT (Retail) 88.00 a swing level of support to hold or not
IYR (Real Estate) I did tell you all this would go to new highs-hope you made money
ITB (US Home Construction) I really like where this held so if market continues, with an inside day, like this again over 24.26
GLD (Gold Trust) Blow off volume Friday, inside day light volume Monday-the makings of a bottom to watch for
Metals and Mining (XME) Could be a bottom forming
USO (US Oil Fund) Classic 3 times the average daily volume blow off bottom in the making-tech bubble- remember that!
XOP (Oil and Gas Exploration) 59.20 key support if this is going to bottom out
TBT (Ultrashort Lehman 20+ Year Treasuries) TLTs 120 pivotal unless this begins to break further below 117.68
UUP (Dollar Bull) New multi-year highs
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:
X Inside day. Swing risk is the 50 DMA and like over 40.25
Category 2: (Pipeline) Positive Phase, Condition 2-3, 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:
LEN 42.50 max risk good for swing if clears 43.66 R1
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)
EXPE 83.74 the 50 DMA and still in play for an ORR mainly
CYH Reported today. Ended with an inverted hammer doji. Like if holds 54.65 and clears 57.00 for swing
Category 4: N/A
Phase Change:
LULU Inside day. Would have kept this but could not close even-will look again over 42.37 for a swing
GG Have this here so you can see volume patterns and 3 days of double and triple the average volume-needs to clear R1 now to take a shot
KSS Reports 11/13. Inside day under the 200 DMA-a gap over 55.47 Friday’s high should be followed
JBLU If clears 11.81 then could look like an inverted head and shoulders bottom with risk to today’s low
XRX Confirmed phase change to bullish. Has to hold today’s low and then really clear 13.64 the high of the day it collapsed post earnings
YUM Inside day. Confirmed phase change to recovery. 71.03 good risk and will follow this over 71.85
OC Best close in some time and now, we are watching that 50 DMA
YOKU Reports 11/13. Inverted hammer doji so has to hold 19.00 now
HPQ Reports 11/25 Confirmed phase change to bullish with 35.00 good risk area and has to clear 36.00 for real
Shorts:
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
ATI 32.48 resistance with room to downside
JOY 52.80 Resistance with some support around 51.00 but a heavy chart
Category 6:N/A
Best Best wishes for your trading,
Michele Schneider
