In the film, The Matrix, the Oracle is a grandmotherly woman-gentle, kind and omniscient. In the novel, The Stand, Mother Abigail Freemantle is a grandmotherly woman- gentle, kind and omniscient as well. The newly nominated Federal Reserve Chief, Janet Yellen, is a grandmotherly woman, who looks gentle and kind, but the question remains, like with the other iconic women mentioned, on whether she will be able to tackle the forces around her and actually be omniscient. Did I mention the other women are fictional? Anyway, with the usual rhetoric from the FOMC minutes-keeping QE going, planning to taper in 2014, expecting growth in the GDP to 3%, etc., etc., will Ms. Yellen be able to manage an exit strategy for the bond buyback program without creating even more havoc in the market? The session on Wednesday brought some relief to the Dow, which bounced off the 200 daily moving average, but could not close strong enough to merit a reversal candle. The interest rates rose today in spite of the minutes and nomination. NASDAQ and the Russell 2000s confirmed the warning phases unable to clear back above the 50 DMA. Although the damage in the S&P 500 was marginal compared to the last many trading sessions, the bias remains more negative unless these last 2 days of higher than average volume means liquidation is nearly over with and/or, the NASDAQ or the Russell’s can rally back and close over the 50 DMA. That would most likely bring in new buyers and short covering ahead of the weekend. We are, if nothing else, hopeful -No Country for Old, Disgruntled Men!
S&P 500 (SPY) Second day of unusual volume and close to support levels from the August correction. Does seem like the selling is drying up for now. But the deadline is approaching. Subscribers: Negative pivots in all indices
Russell 2000 (IWM) Confirmed weak warning phase. 103 is a good support area based on historical daily chart patterns from early summer. If it can clear 104.30 the 50 DMA, then good sign. If breaks 103, then 100 is next major area of support.
Dow (DIA) Touched and bounced off of the 200 DMA but not convincingly enough. Therefore, unless it resumes a rally tomorrow, take this more as temporary decline of selling with more to come.
Nasdaq (QQQ) 77.33 is the 50 DMA to clear with 76.00 some interim support and a break of, signal of more weakness to come
ETFs:
XLF (Financials) Like this better if clears 19.75
SMH (Semiconductors) Wednesday’s high super attractive to follow for a long against the low of the session as the gap from September 10th is intact.
XRT (Retail) Now oversold.
IYT (Transportation) Another one attractive to follow over the 50 DMA
IBB (Biotechnology) Oversold so expect a bounce, but question is whether this group has had its day and any rally should be shorted
GLD Gapped lower then made its way back in to the middle of the last 2 weeks trading range.
USO (US Oil Fund)Since it resumed the weaker phase, seeing its inevitable move to the 200 DMA
OIH (Oil Services)Getting close to the 50 DMA
XOP (Oil and Gas Exploration) 64.40 area is a good place for this to find support
TBT (Ultrashort Lehman 20+ Year Treasuries) A gap abpve 76.35 will be compelling and not good for rates.
VXX Subscribers: Took our profits and will watch it for now
UUP (Dollar Bull) Gapped higher which means if can hold 21.60 cuold be getting ready for more upside
EWG (Germany) Over 27.70 clears R1 and today’s high which will be good against 27.40 the gap low
FXI (China) Might be an add over 38.00
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:
CREE Corrected down to the 10 DMA which means today’s low max risk and has to clear today’s highs and R1
CMG 427.15 is a good risk on this big stock very close to the all-time highs. Should clear R1 for best scenario.
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:
HES Like it over R1 and today’s high with holds the 50 DMA
CLH 57.90 good risk now with yet another day of correction and needs to move up over 58.50
HOG Inside day. Over 64.30 also clears the 10 DMA with price close to 2013 highs
LVS Holding the gap and inside day. Over R1 will try again with risk to 64.00
TEX Another one I would get back into over 34.18 with risk to today’s lows
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)
HCA Inside day and good risk to 45.60 or so
VAR Inside day. 74.80 risk and over 76.13 look good
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:
NSM Super Oversold but has to clear R1 and today’s high now to get interesting
Phase Change:
X Even though we are out, I would not hesitate to get back in over 21.45 as I remain long term bullish. Risk is under today’s low
CYH Should hold 43.45 and if good, clear today’s high
USG If today’s low holds, like this today’s high
SWI Kept ¼ position after locking in ½ ATR for a daytrade to play out the possible slingshot pattern. 33.30 is about max risk now
VLO Slingshot low and right on the 80 monthly moving average-would risk to today’s low for swing trade only
Shorts:
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
EQR If breaks 52.13 looks weak with risk 52.65 R1
CIT Max risk 48.94 looks heavy and like it wants the 200 DMA
Bye For Now
