Small caps or Russell 2000s and NASDAQ close on new 2013 highs. Both were leaders from last Friday and held fast to that job even after a shaky open early Monday. The Dow confirmed the bullish phase and began to clear a bit from the 50 DMA. And S&P 500 cleared an important level (170.58) closing above. On the rotation of sectors, rising rates dampened the Real Estate, Homebuilders (closed red), Retail and Transportation groups. Although I never try to pawn myself off as an economist, as a trader, I find some discomfort in the salient groups that measure economic health underperforming the major US indices. Perhaps it’s a more incredulous reaction (or under reaction) to any debt ceiling resolution. Perhaps, it’s more a reflection of a deeper systemic issue. The outperformers-Financials and Semiconductors in particular, are not sloppy seconds by any means, with some very important earnings coming up in those groups-Citigroup and Intel to name a couple. Therefore, with the deadline approaching, cautious optimism prevails. Oh, and Oil and Gas Exploration really is the new Biotechnology, which managed to outperform, but with as much pizazz as the former.
Subscribers: Positive pivots in all indices
SMH (Semiconductors) New highs, which means that those highs have to hold and price has to accelerate away from there.
XRT (Retail) Bullish engulfing day so although it underperformed, could be ready for catch up time
IYT (Transportation) Not as an impressive candle as in Retail, but likewise, good place to watch for catch up.
IBB (Biotechnology) Unconfirmed bullish phase. Subscribers: No longer short, but still a place to go if weakness comes back
IYR (Real Estate) Like to see 65.40 clear
XHB (Homebuilders) Held 2 of the 3 moving averages. Subscribers: Over R1 clears the last moving average or the 10 DMA.
GLD Subscribers: Under S1 could still be a good short
OIH (Oil Services)New 2013 highs
TBT (Ultrashort Lehman 20+ Year Treasuries) TLT went into an unconfirmed warning phase
UUP (Dollar Bull) Subscribers: Over R1 will be interesting
EWG (Germany) Subscribers: New highs again
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) 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:
TEX Kept the position as is and will add over R1 34.60 and most likely raise stop on whole position to under S1 if we do add
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)
CREE Reports October 22nd after market. Another quiet consolidation day with 72.00 level key support
CELG Reports October 24th before market. Has to clear 155.71 R1 and hold 153.10
FDX Slightly negative pivots but inside day. Has to hold today’s low and clear 115.80 R1
AAPL Cleared the trendline which makes 492 the place to hold
HUM If today’s low holds, then over R1 96.25 should get this going. Slightly negative pivots
HCA Needs to get over R1 now as negative pivots but keeping it here since so close to all-time highs
BA Reports October 23rd before the open. For day to miniswing, if holds 118.50, then could see new highs
JAH Reports October 23rd after the close. Inside day and if holds 48.19 and clear Friday’s high 48.75
Category 4: (Rip Tide) N/A
Phase Change:
C Reports before the open. 49.90 is the 50 DMA-if gaps above will watch here for sure
GMCR Not the most exciting stock, but over R1 should see move to the 10 DMA or more
BZH Like the inside day with risk to today’s low if clears 18.12
Shorts:
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
WSM Risk 53.54 and if breaks especially the 200 DMA, could see move down to 49.50
Bye For Now
