With eyes primarily focused on the indices, particularly watching to see if the DIAcould confirm the island bottom or if the QQQs would endure, Monday’s session proved yet another example of the resiliency of the market all around.
Even with IBM opening up 8% lower, the Dow hung in there like a fertile herd bull with a robust libido. Interestingly, the Dow (DIA) also posted an inside day. With two complementary technical patterns at play, the Dow just might be the most happening place for Tuesday- a clear close your eyes, and follow the range break up or down.
The Financial sector (XLF) ran above 200 DMA, which clearly ups the chances for the bulls. Semiconductors and Transportation remained firm over the 200 DMA while Biotechnology and Real Estate entered an unconfirmed bullish phase. Retail finally broke over the top of the range of the last 5 trading days with now overhead resistance at the 200 DMA, the place to clear before we can talk phase change.
By NASDAQ pressing up against the fast moving average, the small caps still relatively underperforming, and SPY yet to clear the 200 DMA (although real close), we do need the Dow to take care of business or the following warning applies:
“If you have more than one bull in your herd, there's a risk that there may be more fighting than mating, and a risk that one or more of your bulls may be injured or even killed.” https://www.wikihow.com/Breed-Beef-Cattle
S&P 500 (SPY) 190.70 is the 200 DMA to clear. Otherwise, a break of 187.00 really, should seal its fate Subscribers: Positive Pivots in all
Russell 2000 (IWM) Needs to really clear 108.80 for a stab at 110 and hold 106.70
Dow (DIA) Confirmed the island bottom with an inside day. Over 163.95 follow up and below 162.21 say goodbye
Nasdaq (QQQ) Confirmed the improved phase to warning with resistance at 95.00
XLF (Financials) Unconfirmed phase change to warning if can hold 22.35
KRE (Regional Banks) Inside day making this interesting over 37.14
SMH (Semiconductors) If this gaps over 47.56 and holds that gap, that would make for a possible island bottom-strong pattern in deed, If now, under today’s low, trouble
IBB (Biotechnology) Unconfirmed bullish phase but marginally
XRT (Retail) Got real close to the 200 DMA at 84.73
IYR (Real Estate) Unconfirmed phase change to bullish
ITB (US Home Construction) Unconfirmed phase change to bullish
GLD 120.20 and above clears the 50 DMA
USO (US Oil Fund) Worth waiting for it to clear 31.92 against recent high to catch a good bounce
FCG (First Trust ISE Reserve NatGas) Over 15.15 looks better for a bottoming formation
TAN (Guggenheim Solar Energy) Subscribers: 35.80 support and over 37.14 clears the 200 weekly moving average
TBT (Ultrashort Lehman 20+ Year Treasuries) TLTs 120 pivotal area held and after last week’s volatility, this looks a bit too good keeping me from getting really bullish
FXI (China Large Cap Fund) Subscribers: 38.40 was pivotal Friday; still is
CORN (Corn) Subscribers: Over 24.75 or R1 and I like this for a swing with risk under 23.29 or 2 ATR risk
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:N/A
Category 2: N/A
Category 3: (Double Up) Positive Phase, Condition 1 through 4, Positive Pivots which means can either buy an 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)
PM Look for an ORR
PANW Inside day close to recent highs and has to hold 98.62
HUM Prefer an ORR against the 50 DMA but a breakout if risk is good not out of the question for a move to maybe 135 if market holds
Category 4:N/A
Phase Change:
BAC Inside day over the 200 DMA but under the 50 DMA. Against 16.12 looks good if can clear 16.43
WFM If this can clear 37.40 once and for all, we will try for a new swing trade
DRI Inside day on converging moving averages. Risk 48.30 and has to clear 49.26
RAX Small swing position against the converging major moving averages. Over 35.40 should go to fill gap over 36.00
CPHD Like this against the 200 DMA over R1 47.21 for a move to 50.00
AXL Reports 10/31 Nearly 2 doji days in a row with one push over the 50 DMA 17.71, good risk to 17.40
DDD Reports 10/28 Consolidating above the 10 DMA at 41.40 which if holds, over 42.40 area looks good
X Reports 10/28 34.30 has to clear now with risk to today’s lows
Shorts: TDC NFLX
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
KSU Inside day under the 50 DMA with resistance at 117.75 if breaks 113.91
DE Weak today-resistance at 82.70 looking for 78.80 or lower
Category 6: N/A
Best Best wishes for your trading,
Michele Schneider
