If there are two indicators I call my reliable best friends, they are the 50 and 200 DMA's-or what I prefer to say-Determining the Phase of any instrument.
Why? Because they tell me mostly everything I need to know-long or short, how big a position based on the strength or weakness of the phase, when the cycle of phases are improving or deteriorating and how much skin we should have in the game all together, whenphases depict incredible diversion.
With that said, consistent words in this daily blog relate to giving you information on phase changes, diversions, etc. And that brings us to today. The S&P 500 confirmed the warning phase. The small caps have been in the bearish phase and closed near the low support area of 109.72. More importantly, first time IWM closed under 110 since May 21st-not pretty.
NASDAQ and the Dow continue to keep hope alive along with the sectors that have life over the 50 DMA such as Semiconductors, Transportation, Financials and Biotechnology.
Gold, oil and natural gas continue to show signs of deflation, although the 30 year bond rate firmed today, so for this amateur economist, hard to say if its deflation fears or firming rates and US Dollar. Whatever, the weak got weaker.
To come back around to phases-my advice is consistent-keep your longs in the instruments with positive phases, your shorts in the negative phases, keep cash as your main position and get ready to punt.
S&P 500 (SPY) Confirmed warning phase. If takes the path of IWM, looks like August lows next support Subscribers: Negative Pivots in IWM Positive in SPY DIA QQQ
Russell 2000 (IWM) Last week this closed under a major weekly moving average-first time since 2012.
Dow (DIA) Unless this clears 171, it seems to me its stalling from the inevitable drop under the 50 DMA
Nasdaq (QQQ) If this breaks 98.00 that should seal the fate. To keep hope alive, it has to clear 99.20
XLF (Financials) Also held the 50 DMA-like QQQ DIA, if breaks the 50 DMA not good
KRE (Regional Banks) Best I can say is that this is holding August lows with an inside day
SMH (Semiconductors) Also held the 50 DMA-like QQQ DIA XLF, if breaks the 50 DMA not good with an inside day
IYT (Transportation) Also held the 50 DMA-like QQQ DIA XLF SMH, if breaks the 50 DMA not good
IBB (Biotechnology) 272 is the sweet spot to hold or break-especially on a closing basis
XRT (Retail) A case for deflation fears
USO (US Oil Fund) And another fine example of phases-ran to the 50 DMA on Monday, and Tuesday failed from there in its bear phase
TAN (Guggenheim Solar Energy) Subscribers: Not this time, but one day..
UUP (Dollar Bull) New multi-year highs
EWW (Mexico) Subscribers: Confirmed slingshot low
SGG (Sugar) Subscribers: Dropped to the lows of a monthly channel going back to 2011 and closed with an inside day-now I am interested
JO (Coffee) Subscribers: confirmed phase change to bullish
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:
ROST Chopping around the 10 DMA and needs to clear 76.00 and hold 74.50
Category 2: 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)
SWKS 59.25 highs to clear-inside day with slight negative pivots
PANW Good move over the 10 DMA and consolidating-has to hold 95.80 and really clear over 100.00
INTC If today’s low holds, a place to go for a long over 35.08
CELG Really has to clear 96.50 but like if holds 93.90
Category 4: N/A
Phase Change:
D Hammer doji candle on the 200 DMA so at least worth watching
PAA Unconfirmed phase change to bullish if holds today’s lows
Shorts: On Focus List: HES INCY DOW TTM
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
OXY 97.20 area max risk now and still see much lower levels to under 95.50
EQT Looks like its flagging with resistance at 92.75 for a move to around 85.50
DKS Unconfirmed warning phase and resistance at today’s highs
EOG Unconfirmed distribution phase and should not clear 100
AFL Under 58.00 see lower levels to 53.00 if market is weak
Category 6:N/A
Best Best wishes for your trading,
Michele Schneider
