Oh, what a tangled web we weave when we go long cause we believe! (Believe that the market will go straight up that is.)
After hoots and hollers on Tuesday, reality set in on Wednesday. Not harsh reality mind you; rather, just enough to remind everyone that 2013 was so last year. The phases, although improved in the S&P 500 and NASDAQ, in the Dow, returned to Distribution after a brief respite over the 200 DMA. TheRussell 2000s failed 110, and at the end of the session, failed Tuesday’s lows)
I did warn that Wednesday, if first going long, could mean that the party, which started long before you got there, was devoid of goodies with only the crudité left (Keith always tells me when I shop for a dinner party, nobody eats the crudité.)
However, the Biotechnology and Retail sectors managed to hold onto the Bullish phases, while Transportation could not, even after a projection of an 8.8% increase in shipments from Black Friday to Christmas Eve in Federal Express.
I asked you all to share with me your thoughts on what has fundamentally changed to even entertain the notion of new highs in the indices. I received a couple of replies stating hopes of more stimulus from Draghi and the US Federal Reserve, to the recant of Ebola wiping out the human race. Sorry, not impressed.
If Wednesday’s session was digestion, then we should see Tuesday’s lows hold in the rest of the indices (did not in IWM with a nasty bearish engulfing pattern to boot). There could be some better setups after we now worked offnear term overbought conditions. But, if digestion turns to indigestion, which in turn becomes an ulcer, then under Tuesday’s lows, check out the safety plays like the volatility index (VXX) and the Long 30 year Bonds (TLTs). Or,keep cash as your main holding, if that’s more your style.
S&P 500 (SPY) 190.81 is the 200 DMA and no longer that far away.Subscribers: Negative Pivots in DIA IWM Positive in SPY QQQ
Russell 2000 (IWM) Wrote that if this broke under 110 expect to see 108.80. The low is 108.86. Now 108.80 is key and 107.00 next level to watch. If clears back over 110, that would be a great sign
Dow (DIA) Closed weak under the 200 DMA but over the 10 DMA at 164.22. Under that looking at 163.00
Nasdaq (QQQ) Best shape if holds 96.00. If not, looking at 94.40 next. The 50 DMA is 97.93
XLF (Financials) 22.36 the 200 DMA to defend
KRE (Regional Banks) 37.14 pivotal
SMH (Semiconductors) 46.85 the 200 DMA
IYT (Transportation) Under the 50 DMA but far away from the 200 DMA making this a good place to go if market is strong
IBB (Biotechnology) Impressive hold of Tuesdays gap higher with 280.71 the recent highs and under 270, trouble
XRT (Retail) Back to a distribution phase under the 200 DMA 84.71 pivotal
ITB (US Home Construction) Tested but failed to clear the 200 DMA
GLD Got the pullback after failing the 50 DMA. 120 puts it back above and support lives at 118.65
USO (US Oil Fund) Cannot find a bottom which is most certainly a concern
TAN (Guggenheim Solar Energy) Subscribers: Bearish Engulfing pattern
TBT (Ultrashort Lehman 20+ Year Treasuries) TLTs 120 pivotal area held with a move over 120.82 clearing the 10 DMA
CORN (Corn) Subscribers: confirmed phase change to recovery
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 New highs but closed lower-if not a reversal candle, 103 should hold
Category 4:N/A
Phase Change:
WAG Confirmed the recovery phase so still interested for a swing now against Tuesday’s lows if it can hold 60.97 intraday and clear 61.90
OC Reported and closed with an inverted hammer doji. If holds gap low or 30.97 a contender over 32.15 the pivots to clear the 50 DMA
BZH Held the 50 DMA confirming a recovery phase. If holds today’s lows, and clears 18.12 could see more upside. 1825 is the 23 monthly moving average
Shorts: VXX on an ORR TLT and the ultrashorts if the indices break more
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
TDC Major move south so now, could continue under 40.00 or get an ORR
FAST Under the 200 weekly moving average and in a bear phase. 42.19 resistance with 34.00 a target
DFS Reported and not well. Now, 62.53 resistance with a move under 60.44 reason to think we will see the 200 DMA and lower
DTV Failed the 50 DMA which is now resistance and under 85.00 looks weak to 82 maybe lower
MON Couldn’t clear the 200 DMA and failed the 50 DMA. Now, under 113.03 have a good swing risk to over the 200 DMA at 114.71
Category 6: N/A
Best Best wishes for your trading,
Michele Schneider
