From the peak high September 19th to the blow off low October 9th, the S&P 500 closed pretty much in the middle of that range. It’s kind of how a lot of traders feel-sort of middling as the politicos work it out (or not.) It’s as if the S&P 500 is saying, “Don’t want to be short; but don’t want to be too long either.” However, we are back to seeing a very different looking scenario in the small caps, or Russell 2000s, that closed just in reach of the recent 2013 highs. NASDAQ is also close enough to the highs to make it interesting and theDow managed to end the week in an unconfirmed bullish phase. If last Tuesday and Wednesday never happened and one looked strictly at the Dow, Russell 2000s and S&P 500, one would see that they all closed higher week to week! For NASDAQ, it was a marginally lower. The Koch Brothers had an impact for sure with their pleas to Congress to get it together-essentially saying that the Government was messing with their portfolio. The buy opportunities that set up last Thursday after a lot of longs got shellacked, seemed almost surreal. So, we go into this week lightly long and ready in case the other shoe drops. Many of the weaker sectors and groups played catch up-the Financials, Real Estate, Homebuilders, while the former shining star-Biotechnology closed in the red. Rotations that will be worth looking at for follow through this week for sure.
S&P 500 (SPY) The low of the nagging confirmed topping candle is 170.58-that will be an important area to clear. The 50 DMA is the crucial area to hold. Subscribers: Positive pivots in all indices
Russell 2000 (IWM) 107.93 is the 2013 high
Dow (DIA) Unconfirmed bullish phase which means it breaks the 50 DMA, a huge warning to the longs.
Nasdaq (QQQ) As we get closer to earnings in GOOG, AAPL, etc, this index will be worth keeping eyes on
XLF (Financials) Confirmed bullish phase, so that means the 50 DMA has to hold and the price accelerate away from it
SMH (Semiconductors) 2103 high 40.71
XRT (Retail) Confirmed the bullish phase but has a lot of overhead to contend with
IYT (Transportation) Confirmed the bullish phase and should hold around d 117.60
IBB (Biotechnology) Unconfirmed warning phase. Subscribers: Got short JAZZ on Friday-starter position since this area is acting “toppy”
IYR (Real Estate) Although this confirmed the recovery phase, there is still a lot of resistance to tear through
XHB (Homebuilders) Crossed 3 moving averages in one shot-good sign
GLD No more island bottom from last June/July. See much lower prices in the months ahead
OIH (Oil Services) 48.52 the 2013 high
XOP (Oil and Gas Exploration) Oil and Gas Exploration is the new Biotechnology-no comment on the implications-it’s just is what it is
EWG (Germany) Subscribers: New 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) N/A
Category 2: (Pipeline) N/A
Category 3: (Double Up) Positive Phase, Condition 1 through 4, Positive Pivots which means can eitherbuy 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)
CREE Quiet consolidation day with 70.50 level key support
AAPL If this gaps higher, go with it since it will clear the trendline and probably go to 510-520. Risk is around 490
HUM Inside day. Like over Friday high and R1 with max risk 95.28.
GCI still holding gap from June and crossed the 50 DMA for unconfirmed bullish phase, which means the 50 DMA has to hold as risk. Reports 10/21.
HCA Over 47.07 should get another leg up with support now around 45.90
TEX 34.13 is the 10 DMA and with our ½ position, and slightly negative pivots, will use S2 as a stop but consider an add over Friday’s high
Category 4: (Rip Tide) N/A
Phase Change:
AVP Unconfirmed bullish phase. 20.68 is the 200 DMA support with a reversal or breakout looking good to 24.50
GMCR another scratch which with an inside day will look better over R1 or 69.46
USG Cleared the 10 DMA and over the 80 monthly. Reports 10/24. See 32.00 within reason as target with support now 27.90
BZH Cleared 3 moving averages and has to hold Friday’s low. 18.20 is the weekly moving average and some resistance but if clears good sign
CYH Last week we scratched and now with an inside day, on the 200 DMA will look here over 43.95 R1
RIO Would probably look for an ORR against the 200 DMA now
Shorts:
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
JAZZ have a small short position with risk to Friday’s high looking for 81.00 next support
ACAD 2 inside days and risk 22.73. Like under Friday’s low
BMRN looks like ACAD with the 200 DMA a nice move down-2 inside days
Category 6: White Cap-N/A
Bye For Now
