Monday morning I awoke with vivid recall of a dream. In the dream, I met a safecracker who specialized in cracking those antique safes made of steel or iron with vault doors and frames. (Incidentally, they sell on EBay for anything from $50.00 to over $2,000 if circa 1860 and a large bank safe.) When I inquired as to the particulars of his profession and why he chose it, he told me that he scoured old abandoned buildings in search of such safes, and after finding them, often scored large sums of cash which he assumed was his for the taking, a finder’s keepers so to speak. (The rest, I gather, he’s selling on EBay!
I wondered what the dream meant-and since the market tends to rule my world, where the metaphor was. Honestly, I’m not certain about the answer, but this much I know. Finding a good trade is like searching for ancient treasure in a locked up safe. If you find a good one you score profits. If not, you try to sell your trash to the highest bidder!
Besides the stunning ephemeral recovery of NASDAQ over the 50 DMA, it then preceded to tuck its tail between its legs and retreat back beneath it; the Dow returned over the 200 DMA for an unconfirmed warning phase, now looking for a second day to confirm-been so hard to get these second day confirmations lately. The S&P 500 tested what could be substantial overhead resistance-the tell will be if it breaks 194 on Friday and the Russell 2000s recaptured 110.
For my mind, a story of one possible Ebola case, which logically could prove true given it’s concerning a Doctor who has returned to NY after working with the infirmed in Africa, should not be a catalyst to wipe out over 100 points (or about 100 Billion Dollars) in the Dow in a matter of minutes. To me, it’s systemic of a much larger issue with the market. I have seen this market ignore much worse news because the conviction for higher prices is unshakable. Not lately. Currently, the market lacks conviction-plain and simple.
Until Phases other than in sectors such as Biotechnology (which made a new high), Transportation (Unconfirmed) and Real Estate point green or back to bullish in the indices, keep your seatbelts fastened!
S&P 500 (SPY) The overhead resistance 196.79 at the 50 DMA is palpable. If it breaks 194 then I would imagine we could see Tuesday’s low or worse. Subscribers: Positive Pivots in all
Russell 2000 (IWM) 110 Pivotal, 108.80 support then 107 and overhead resistance at 112.25 the 50 DMA
Dow (DIA) Cleared the 200 DMA at 165.64 which has to hold for this to continue since having its island bottom-which is a bullish sign
Nasdaq (QQQ) Teased the 50 DMA closed below now, above 97.96 again on Friday, maybe we can see more
XLF (Financials) 22.36 the 200 DMA to defend and the 50 DMA is 23.08-like to see this for real health
KRE (Regional Banks) 37.14 pivotal
SMH (Semiconductors) 46.89 the 200 DMA with an inside day and overhead at 50.20
IYT (Transportation) Cleared the 50 DMA-like to see 150.09 hold
IBB (Biotechnology) New highs not surprising
XRT (Retail) Back to a unconfirmed warning phase over the 200 DMA 84.71 pivotal with 86.68 the 50 DMA to clear
ITB (US Home Construction) Closed just over the 200 DMA now looking for confirmation
GLD Back over 118.96 and this was a good healthy pullback
Metals and Mining (XME) Inside day
USO (US Oil Fund) Inside day and still needs to prove itself as bottoming
OIH (Oil Services) Inside day
XLE (Energy) Like OIH, these energy, oil related instruments could be bottoming
XOP (Oil and Gas Exploration) Inside day
FCG (First Trust ISE Reserve NatGas) Inside day
TAN (Guggenheim Solar Energy) Subscribers: Inside day
TBT (Ultrashort Lehman 20+ Year Treasuries) TLTs broke 120 which remains pivotal unless this begins to break further below 118.70
CORN (Corn) Subscribers: Inside day-now needs to clear 25.40
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)
JWN Inside day and digestion new highs. Like it for a day to mini with risk to 70.96 and has to clear 72.39
HUM 2 Inside days near the highs and worth a day to miniswing if clears 133.78
ETP 2 inside days with risk 63.75 risk and like over today’s highs for mini to hybrid swing
Category 4:N/A
Phase Change:
WAG If holds 61.90 still in play with probably a swing risk best
OC Like over R1 32.23 if holds today’s lows
SPLK Had a great trade which we got out of end of day. Will continue to watch for reentry over the 200 DMA if holds 59.24
RTN Reported. Huge range so like an ORR but watch for a minute entry if holds 98.08 the 50 DMA
TPX Reports 10/30 Unconfirmed phase change to bullish if holds today’s low and closes over the 50 DMA-good for mini
CCL right under the major moving averages which means if clears 38.55 could see a good miniswing to swing trade using the low of the day as a risk
PNC Inside day after holding up well in the selloff on Wednesday. Like over 82.28 with risk mini to see if it can clear the moving averages overhead
Shorts:
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 39.54 or get an ORR
MON If cannot clear 113.57 look at another shot at shorting this with a possible move to 110. 50 then can reassess
Category 6:N/A
Best Best wishes for your trading,
Michele Schneider
