With all the noise, the Dow both closed with inside days-Tuesday’s range inside of Monday’s range, which coming from a logical place, after a dramatic price rise over the span of 3 trading days, makes a case for digestion. The small caps or Russell 2000s almost had an inside day, breaking Monday’s low by one tick. If it were only that easy, the heavy duty longs would sleep well tonight. But, it’s really not that easy. NASDAQ made a new 2013 high and closed on the intraday low-always a reason to hold one’s breath-waiting for confirmation as topping action or not. S&P 500 hasn’t done much to squelch its possible topping candle from September 19th. Not saying the bears should get all snuggled up, since this is where the market gets real interesting. News! Like it or not, headline sensitive price action supported by literally 2 possible technical scenarios-top or digestion for more upside, is making us all a little nuts. Even with our Premium portfolio’s closed positions up 32% since June (see the site for details), we are currently trading less often with smaller position sizing and tighter risks.
S&P 500 (SPY) After a fairly significant distribution volume day, if 168 breaks, the writing will appear to be on the wall. Otherwise, long and short term trend intact. Subscribers: Negative pivots
Russell 2000 (IWM) Nearly an inside day could be like almost surviving an operation. However, unless there is another down day tomorrow after Monday’s new highs, this is still ok.
Dow (DIA) True inside day but also true return to an unconfirmed warning phase.
Nasdaq (QQQ) Possible reversal candle from new highs, especially if this opens lower and cannot recover
XLF (Financials) All about 20.00
SMH (Semiconductors) Possible reversal candle from new highs, especially if this opens lower and cannot recover
XRT (Retail) Inside day but a move under the 50 DMA, not pretty
IYT (Transportation) Most hopeful looking right here
IBB (Biotechnology) Unconfirmed warning phase. Subscribers: Back to looking here for short setups
IYR (Real Estate) Like to see 65.40 clear or back to 64.00 area
XHB (Homebuilders) As easily as this crossed 3 moving averages to the upside, is as easy as it failed all three again on Tuesday.
GLD Investors could easily run here against the recent lows thinking it safer.
OIH (Oil Services)A true inside day after makingnew 2013 highs
XOP (Oil and Gas Exploration) Still good looking although wouldn’t want to be a fresh buyer at these levels
TBT (Ultrashort Lehman 20+ Year Treasuries) TLT now a confirmed warning phase. Subscribers: As mentioned in today’s video, inside day in TBTs and over Monday’s high clears the 50 DMA
FXI (China) Inside day
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: New and Old Subscribers: I do not include on the list 1. Anything with a weekly or daily RSI over 92 2. Anything within 4 days of reporting earnings 3. Anything with a risk over 1 ATR from its current close 4. Anything with only one day under the Floor Trader Pivots (unless specifically noted. 5. Anything with a potential slingshot or brick wall high (new 60 day high, close in the bottom 25% of the intraday range.
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:
HCA Needs to get over R1 and today’s high while it’s in a consolidation mode.
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)
HUN Reports October 29th. Inside day. Wins vote for best looking right now if can hold today’s low and clear today’s high.
LEA Reports October 25th. Inside day. Like today’s range to hold or break above for move to new highs
CREE Reports October 22nd after market. Yet another quiet consolidation day with 71.80 level key support-slightly negative pivots but inside day
CELG Reports October 24th before market. If S1 holds, then this still can make a move up before earnings
CLF Reports October 24th If holds today’s low, then see possible push over the 200 DMA or over today’s highs
BA Reports October 23rd before the open. For day to miniswing, if holds 117.15, then could see new highs over today’s high if clears
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:
TEX Should 33.17 area hold (the 80 monthly moving average), and this cross 34.50, would be happy to reenter. But, not until that happens
Phase Change:
GG Slingshot and bullish engulfing pattern. Looking for confirmation if holds 24.00
DLR Reports October 29th If holds 54.30, then possible over R1 then today’s high to see the recovery phase accelerate. Holding the 80 monthly moving average
Shorts:
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
AVP Reports October 31st. Those 3 converging moving averages are compelling for a short now with 20.79 risk and under today’s low reason to see 18.75
HD 75.93 now a good risk with what looks like an attraction to the 200 DMA at 73.40 as target.
M Under 42.18 breaks last week low and should be good for another leg down-some support at 40.50 then 38.75
ACAD More white cap but nonetheless, under 22.11 or S1 worth another short looking for 14.50
JOY If breaks S1 51.04, then could see some renewed selling with next support down near 41.00
RDC 36.69 good risk with support down at the 200 DMA 35.00
Bye For Now
