Earnings season is so interesting. Even if you are like me, not particularly schooled in P/E Ratios, EPS, and the like, the simple adage of “Don’t hold into earnings” unless you are a sophisticated options strategist, is pretty darn sound. Take NFLX-a darling for a short period of time before it totally tanked. Or CREE, which at the time of writing was down a cool 13%. I mention this because we have 2 distinct confluences to consider. First, the earnings-still many more to come. Second, is the rotation of the indices and certain sector/groups. The small caps or Russell 2000s closed marginally up maintaining the runaway gap. NASDAQ closed on new highs but with a doji day. The Dow closed up but nowhere near new highs and S&P 500 accelerated to close on new highs. Homebuilders excelled along with Real Estate. Biotechnology regained some luster and Gold tested the overhead moving average for a possible phase change. The dollar was crushed again while rates dropped. We began the week looking at rates firming and the havoc that might cause and at midweek, we look at the rates dropping-and perhaps a closer look at certain commodities. Note, rates are still firmer than where they were when 2013 began. We also should keep eyes on the VIX as it held up pretty well, all things considered.
S&P 500 (SPY) Subscribers: Positive pivots
Russell 2000 (IWM) 109.83 is last Friday’s low. Although the market remains strong, a break and close below that level-fair warning.
Nasdaq (QQQ) 81.35 the breakaway gap low
XLF (Financials) Big pause near the highs
SMH (Semiconductors) holding the runaway gap
XRT (Retail) Possible reversal candle if confirms tomorrow-not good for this group. Subscribers: If closes under 83.12 will look to exit
IYT (Transportation) New 2013 highs again but if gaps lower, another bad sign for a possible island top
IBB (Biotechnology) Better, but still not over last week’s high
IYR (Real Estate) A gap over the 200 DMA would be interesting. Otherwise, best I can see is run to overhead resistance
XHB (Homebuilders) Cleared the inflection point-looks better. Subscribers: Small position to see if this can move even further from the converging moving averages.
GLD 129.65 is the 200 DMA. Subscribers: SLV Crossed the 50 DMA and crossing the 80 monthly. Therefore, will look for an entry for a swing if today’s gap low holds
USO (US Oil Fund)The 200 DMA –right there.
OIH (Oil Services)Back to looking good
XLE (Energy) After a possible reversal from the highs, did not confirm that on Tuesday.
XOP (Oil and Gas Exploration) The candle on this one is also alarming and one to note after explosion to new highs.
UUP (Dollar Bull) Those 2011 lows looking more likely now
VXX Subscribers: Long for a swing against the recent lows
EWG (Germany) Runaway!
FXI (China) Like 38.00 as support to hold
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:
HCA Reports before open October 31st. Correction to the 10 DMA making 46.70 good risk with a move over R1 good for another leg up
NYX Reports November 5th. Max risk 44.45 the 10 DMA and has to cross today’s high and R1-like it over the 80- monthly moving average
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:
ADSK Reports November 14th. Inside day. And oversold. A push over R1 and today’s high takes it back over the 10 DMA. Risk then 39.90
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)
DOV Confirmed phase change to bullish. If 89.50 holds still see a move to 92.50-93.00
OXY Reports before the open October 29th so minswing trade after 2 inside days with today’s low max risk for one more possible push
REGN Reports November 5th. For a miniswing trade, like if holds 301.50 area, and really, has to clear 310 to get moving
BBBY If holds 76.60 area then could see move to upside although it has upside resistance from 9/26 candle high
Category 4: (Rip Tide) N/A
Phase Change:
PM AN ORR against the pivots would be better. Can see move up to 90.00 the 200 DMA
KBH Unconfirmed phase change to recovery and an inside day. The 50 DMA is 17.03, a good support level. Through 17.31, could see a move to the 200 DMA
M Reports November 13th. Unconfirmed phase change to accumulation. 44.19 good risk.
MDVN Reports November 7th. Huge volume on an unconfirmed warning phase change and slingshot low. Risk 53.00 area good
MAS Reports October 28th. Crossed 3 moving averages. Now, today’s low key to hold. Moved this year over the 80 monthly moving average
CYH Reports October 30th. Inside day on the 200 DMA which means risk to today’s low good and has to cross R1 and today’s high
Shorts:
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
ACAD Broke the 50 DMA with risk to today’s high. Looks attracted to the 200 DMA
Bye For Now
