From your Hot Air Balloon pilot: “An experienced pilot will bump along the ground to stop the balloon gradually, minimizing the impact.” Then, all hell can break loose! And so it goes. A cycle ends and ends badly with the scariest of all looking candles in all indices. Huge distribution day in volume and not the kind that illustrates a blow off to the downside. Looks more like a run for the exits and the trust broken. Two rays of hope can come from where the warning began-the Russell 2000s. The fell to the 50 DMA. And, NASDAQ which is still holding the runaway gap from October 18th. Bottom line, if those support areas fail, the market is in for more stormy weather keeping those balloons anchored to the ground. If the support areas hold, then what fun it will be to start looking for buys-especially on those instruments that held up ok.
S&P 500 (SPY) 173.60 next support and a move over recent high would be about the only indicator to trust here Subscribers: Negative Pivots in all
Russell 2000 (IWM) 106.88 the 50 DMA
Dow (DIA) I have been writing and showing my subscribers the top of the channel here. We saw that it would head there-and now we see that it did and hit the reject button big time!
Nasdaq (QQQ) 80.87 is the high before it gapped up. If that is not filled, very good sign. Otherwise, will make the 50 DMA here compelling
XLF (Financials) 20.39 support tested and marginally held. The 50 DMA is 20.29
SMH (Semiconductors) I would hardly doubt that the longer term reversal trend to the upside is over. But, I will say those who missed that boat-looks like you will get another shot at cheaper levels
XRT (Retail) That “Could be a reversal candle, but has to confirm”-Yup Thursday
IYT (Transportation) That-“Could be a reversal candle, but has to confirm”-Yup yet again
IBB (Biotechnology) 191.29 last peak low made in early October.
IYR (Real Estate) Back to an unconfirmed warning phase. However, if holds above the 50 DMA, not a bad place to look for a low risk entry
XHB (Homebuilders) 30.00 now the support area to hold.
GLD These doji candles just prove that this has fallen out of favor to trade
USO (US Oil Fund) Perhaps a sign of deflation
XOP (Oil and Gas Exploration) “Heading to the 50 DMA”-wrote yesterday-more like heading and breaking
TBT (Ultrashort Lehman 20+ Year Treasuries) TLTs went back to an unconfirmed recovery phase
UUP (Dollar Bull) Unconfirmed phase change back to Recovery-yo-yo
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
**NOTE: The chances of getting involved on a Friday after going to cash are pretty slim unless something spectacular happens. Here are some ideas:
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:
CAR 2 inside days. If holds the 10 DMA 30.46 then hast clear R1 and today’s high as well
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)
FITB We got out with a scratch due to market conditions. However, this held up really well. If holds 19.00 would certainly reconsider
BZH Gap up after earnings putting this in a bullish phase. Now, close to highs but if holds today’s gap low, worth a look
Category 4: (Rip Tide) Oversold (2 or more days under FTP), Condition 4, Needs to clear R1, Risk previous day low unless noted differently, Target- Day to at least 3 ATRs from entry:
CNX If today’s low holds, then could see a move first over 35.85 then R1 and today’s high
HCA On the 50 DMA and if today’s low holds, like first over pivots then R1.
Phase Change:
PLD Huge selloff to the 200 DMA at 39.26. Long term chart still ok therefore, over 39.50 will get me interested
CCUR Like it over 7.48 for a swing. Today it had an confirmed phase change to recovery
BTU 3 day correction and outperformed. If holds today’s low and clearsR1 and today’s high, could be a move to 23.00 coming
CVX Held the 10 DMA, the bottom of the 3 moving averages. Over 120.45 or so, the pivots, will like better against today’s lows
CCJ Confirmed phase change to recovery. 18.75 looks like a good max risk
AGO Reports in the post market. Like the converging moving averages and especially if it clears 20.90 R1 and today’s highs
Shorts:
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
TEL If cannot clear 52.05, then looks like 50.00 next support and could go lower
C If fails the 200 DMA 48.15 then could go down to 47.60 or lower
CBST 62.65 max risk-looking attracted to the 200 DMA below at 54.00
Category 6: White Cap-Having a 2-3 Day correction over the pivots.. In a Negative Phase, Positive Pivots. Can sell an Opening Range High Failure if happens below R1 or previous day high whatever is higher and/or weakness if breaks S1 and prior day’s lows
IBM Under S1 and the 10 DMA still see lower with the eventuality of it breaking the 200 weekly moving average
Bye For Now
