Hi all. Coming to you live from the bubble. And if I may, like Alice Through the Technical Looking Glass, the indices told me a story I will now share with you.
Beginning with NASDAQ or QQQs, although they broke Friday’s low of 101.07 intraday, they held the runaway gap, although admittedly less enthusiastically. More importantly, they closed above Friday’s low making Tuesday’s session more digestion unless QQQs break 100.56.
The S&P 500, also broke Friday’s low intraday, held the gap from October 31st, and closed back above Friday’s low. It now has 3 doji days or 3 shooting stars, which I find really exciting as a clear technical signal whichever way it breaks.
The Russell 2000s, had the weakest day (for a change), filled the gap form October 31st, but hurrah, and could not close above Friday’s low at 115.88. (115.80)
Finally, the Dow continues to live a life of its own, closing green and defending its new high status. Furthermore, it eked out an Accumulation day in Volume-green close, volume better than the day prior.
Speaking of volume, looking at the world of blow-off volume patterns, must note that gold closed green which is positive, but needs another indicator to prove itself as a bottom. A gap above the last 3 session’s prices would be a step in the right direction towards an island bottom. For my money, that would be the most powerful and convincing pattern to see.
With oil, (USO), volume was equally spectacular on Tuesday as it was on Monday, making this also noteworthy for perhaps an island bottom.
Either GLD or USO or dare I say both setting up for bottoms, could be the tea at the Mad Hatter’s tea party! Otherwise, it’s “Off with their heads!”
“Contrariwise,' continued Tweedledee, 'if it was so, it might be; and if it were so, it would be; but as it isn't, it ain't. That's logic.”
Lewis Carroll, Alice's Adventures in Wonderland & Through the Looking-Glass
S&P 500 (SPY) 3 shooting stars which means buy over the highs and at the very least keep away from longs under Tuesday’s lows Subscribers: Negative Pivots in all
Russell 2000 (IWM) Broke Friday’s low yet continues to hold 115.70 for now
Dow (DIA) Over 173.90 hard to argue with but under Tuesday’s low will be sobering
Nasdaq (QQQ) Held where it needed to. Wednesday should let us know if it fails the runaway gap or blows to new highs
XLF (Financials) If that was a correction, seems this has more upside to go
KRE (Regional Banks) I’m thinking Tuesday’s correction might have been a gift.
SMH (Semiconductors) Paused-over 52.00 should continue
IYT (Transportation) This did make new highs then sold off but closed green-not easy if looking for the scalp-better if willing to sit against 155.90
XRT (Retail) 88.00 a swing level of support which interestingly enough, it closed just on the nose of
IYR (Real Estate) As long as rates stay low, this looks good
ITB (US Home Construction) Sharing a room with IWM or maybe a hospital bed
TAN (Guggenheim Solar Energy) Subscribers: If holds 37.55 good sign especially if clear back over 38.50
TBT (Ultrashort Lehman 20+ Year Treasuries) TLTs 120 pivotal unless this begins to break further below 117.68
EWW (Mexico) Subscribers: Like this one over R1 67.95 with risk to the 200 DMA
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:
ULTA Knowing that this is a weird trader, I still think worth it if holds 119.35 and clears R1 121.37
ABBV Had the runaway gap now corrected for 2 days. Like ½ over the 62.86 and the rest over R1 63.39 for a day to mini
BRCM 2 Inside days-like for day to mini-1/2 and ½ over pivots then R1 41.82
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)
PAY Like an ORR best but over 37.41 then 37.69 can rocket for a good day to miniswing trade
BBBY 2 Inside days which means good for a daytrade to min over today’s high with risk to today’s lows
OVTI Has to clear 27.39 then hold 26.75 to see if this has more-day to miniswing risk is best for now
EXPE Has negative pivots but broke then closed above the 50 DMA. If that holds 83.66 and this clears 85.32 then still good
Category 4:N/A
Phase Change:
FB we have ½ from our daytrade and now looking for a hold of 75 and a clearance of 76.64 the 50 DMA
MAS Confirmed phase change with positive pivots. Now, over today’s high also clears R1 with risk to today’ low for a swing
KSS Reports 11/13. Closed over the 200 DMA for a phase change-if holds today’s lows, will buy for a day to miniswing
CNX 37.97 is the 200 weekly moving average to clear and now, the 50 DMA is key support at 36.83
YOKU Reports 11/13. If holds 19.20 still very much interested in a day to mini
HPQ Reports 11/25 Needs to do something soon, and that would be clear and close over 36.00
Shorts: Focus List IGT XRX NFLX ATI
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
TOL If cannot clear 32.46 the 50 DMA then could see move down to next support around 30.50
Category 6: N/A
Best Best wishes for your trading,
Michele Schneider
