Let’s begin with a shout out to the Dow for its observance of “200 is the New 100” one more time! Another shout out to the S&P 500 for the best day in 2014! Cheers!
Payday for the bulls, a day of short-covering for the bears, and perhaps a tad too late to first enter long if one were in cash all this time. Why? Even with the very impressive move off of last Tuesday and Wednesday’s lows, and in spite of the phase improvements from Distribution to Warning in NASDAQ (QQQs)and S&P 500 (SPY), all still live in negative phases. The Dow, (DIA) barely cleared the 200 DMA and The Russell 2000 (IWM), although beyond 110, remains in a Bearish Phase.
The three salient sectors back to Bullish are Real Estate, Transportation andBiotechnology. This tells a story although not necessarily the whole story. As your humble narrator I must ask you to ask yourselves-what has fundamentally changed to believe the market can head to new highs from here?
If you do have an answer, please feel free to share. (Incidentally, I encourage my readers to share comments with me in an email or tweet anytime.) If you drew a blank as to why we should see new highs, then do ask yourselves the very tangible question of what must one risk on that low probability?Furthermore ask yourself, what type of trades should be executed right nowgiven recent high volatility-Daytrades? Miniswings. Position Swings?
Our Market Tone Indicator says have Day to Miniswing trades only in equal parts Long and Short. I find that sobering or at the very least, an excellent reason to keep exuberance at bay.
For redundancy sake, anything is possible. I have seen the market defy and even reinvent logic. But for my eyes, I seek pockets of weakness for the next best shorts while I continue to take profits on the longs we‘ve held since anticipating this current move higher last week.
S&P 500 (SPY) 190.76 is the 200 DMA and although far enough away now, worth noting. 196.80 is the 50 DMA overhead Subscribers: Positive Pivots in all
Russell 2000 (IWM) Cleared 110 which once again is a pivotal number. 112.37 is the 50 DMA and under 110 expect to see 108.80
Dow (DIA) Closed above the 200 DMA at 165.63 and now needs to stay above it.
Nasdaq (QQQ) 97.91 is the 50 DMA and now, 95.00 important support to hold
XLF (Financials) Confirmed phase change to warning with the 50 DMA at 23.07
KRE (Regional Banks) 37.14 now support
SMH (Semiconductors) No island bottom but a very impressive move to fill the gap from 10/08. Can it clear 50.00?
IYT (Transportation) Unconfirmed bullish phase
IBB (Biotechnology) Confirmed bullish phase and the vote for the first one to tell us whether or not this market can match or take out recent highs
XRT (Retail) Unconfirmed phase change to warning. 84.72 the 200 DMA
IYR (Real Estate) Confirmed phase change to bullish
ITB (US Home Construction) Confirmed phase change to Recovery
GLD Tested but couldn’t quite clear the 50 DMA. That could mean time for a pullback unless it gaps above it Wednesday
USO (US Oil Fund) If deflation is still a concern, this did not do much to impress
TAN (Guggenheim Solar Energy) Subscribers: Good move and not overbought
TBT (Ultrashort Lehman 20+ Year Treasuries) TLTs 120 pivotal area held
CORN (Corn) Subscribers: Unconfirmed phase change to recovery
JO (Coffee) Subscribers: Tested and held the 50 DMA
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)
AAPL Took as a daytrade but if can clear 103, and hold 101.45 then might finally see a push to 105 and beyond
***Note: Although this is not a daytrading service, we do use different duration trades depending upon market conditions. Therefore, when there are periods of low volatility and tight ranges, swing trades serve the model best. However, during times of high volatility and wide ranges, a day to minsiwng trading model serves best. In the spirit of MMMPremium as an Integrated Service, we will begin to put all trades in the model portfolio with the guarantee that our duration decisions reflect the current market condition. We will begin all texts/tweets with “For the Portfolio-“then differentiate between the types of trades in the text/tweet.
Category 4: N/A
Phase Change:
LULU Unconfirmed phase change to recovery if holds today’s lows. Over 41.33 looks too to 42.50 and beyond
TEX Reports 10/29 Like over 28.00 since also can clear week and month moving averages and head to 34.00 if good
BAC Unconfirmed phase change to bullish if today’s low holds will look at an ORR or breakout over 16.50
WFM 38.22 the 50 DMA with 37.65 the new support
RAX Must hold 35.00 and fill gap to 36.50 then go beyond to keep us in this trade
DDD Reports 10/28 ORR now works best against 42.50
HSP If can clear 50.94 and hold 50.25 looks like it has room to 55.-56.00
WAG If holds 60.90 and the 50 DMA will confirm a recovery phase with a move to 65.75-66.00 possible
ONVO Underperformed and has negative pivot, but holding a slingshot low if can clear 6.38
Shorts: A note about VXX-if clears 34.64 we will have a good miniswing risk to under today’s low (in case)
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
TDC Inside day. Under S1 with risk to pivots, could see move to lows or lower
Category 6: White Cap-Having a 2-3 Day correction over the pivots.. In a Negative Phase, Positive Pivots. Can sell an Opening Range High Failure if happens below R1 or previous day high whatever is higher and/or weakness if breaks S1 and prior day’s low
NFLX under S1 and 355 with a risk to 367, could see another leg down especially if the market corrects
Best Best wishes for your trading,
Michele Schneider
