New high close in the S&P 500! Good work in the Dow although still has some catching up to do or can resume its “thorn in the side of the market” status. Small caps or Russell 2000 seem to be digesting both in time and price with the runaway gap from over a week ago intact and a high weekly relative strength indicator showing overbought conditions to work off. Finally, NASDAQ, which also made new 2013 high, not only the darling of the market after some impressive earnings; but also, the one to watch after AAPLreports its earnings right after the close this Monday. Many folks have asked me how I use volume and whether or not I gauge the strength of a rally on how much daily volume there is. Here’s the short and simple answer. It’s not the actual volume that counts so much-unless there is a double or triple the average volume on extended moves up or down-signaling a possible blow off. Rather, it’s the volume in relation to the instrument itself. In other words, I look for accumulation (when the volume is higher than the volume from the day before and the price is green) or distribution (when the volume is higher than the day before and the price is red). Then, I look for 3 or more of either scenario (accumulation or distribution) over the course of 2 weeks. In the case of the S&P 500, since October 14th, there have been 5 accumulation days. Just how important is that? I welcome you to check out our free indicator on the Marketgauge site called Little Big View. Here is the link: https://marketgauge.com/resources/littlebigview/
S&P 500 (SPY) Pie in the sky analysis. If you look at the monthly chart, from the October 2007 peak high, to the March 2009 peak low and the neckline of what looks like a huge inverted head and shoulders bottom which broke out in April 2013, we could be looking at a move to around 220. Unless we break April lows. Then all bets are off Subscribers: Positive pivots in all indices
Russell 2000 (IWM) What is really interesting to me is when a moving average and a gap low correspond. That makes 109.77 super important to hold now.
Dow (DIA) Unless this gets above 156.20 and then the top of a channel that goes back from May peak high, this could be merely a move to resistance and not much more. Too soon to say, but definitely worth noting if this begins to rollover
Nasdaq (QQQ) Not much to say here until we see the AAPL results
XLF (Financials) Impressive, but still did not clear 20.88-to negate the topping candle
SMH (Semiconductors) Unless this clears 40.62, this could still be in correction mode
XRT (Retail) Looks good if the market holds up
IYT (Transportation) Tired up here perhaps
IBB (Biotechnology) Digesting its recent move-all without getting to the all-time high
IYR (Real Estate) Cleared the 200 DMA for an unconfirmed phase change to accumulation
XHB (Homebuilders) Subscribers: Inside day
GLD Confirmed phase change to recovery Subscribers: SLV Maintained the recovery phase and the swing is still in play. We would like to see this clear 22.00
USO (US Oil Fund)Confirmed the reversal candle and unconfirmed phase change to warning. Subscribers:Confirmed the slingshot and now will play out the swing to see how much it’s got
OIH (Oil Services)Has to clear the brick wall candle 49.78 to keep going
XLE (Energy) This did clear the topping candle
XOP (Oil and Gas Exploration) Listless action but still in the game.
TBT (Ultrashort Lehman 20+ Year Treasuries) Inside day.
VNM (Vietnam) Subscribers: See a 1.5 risk versus a 10 ATR reward if it holds around the 10 DMA. Will be watching for an entry and will cover the video.
VXX Subscribers: Inside day. Still here until S2 and recent lows break
FXI (China) Subscribers: Low RSI and holding the gap low 36.19. Also blow off potential like volume on the down days last week. R1 and Friday’s high line up-will look for re entry
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
**NOTE: New and Old Subscribers: I do not include on the list 1. Anything with a weekly or daily RSI over 92 2. Anything within 4 days of reporting earnings 3. Anything with a risk over 1 ATR from its current close 4. Anything with only one day under the Floor Trader Pivots (unless specifically noted. 5. Anything with a potential slingshot or brick wall high (new 60 day high, close in the bottom 25% of the intraday range.
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:
SLB Good correction to the 10 DMA making Friday’s low the risk. And over pivots, R1 and Friday high, could see a resumption of the move higher
Category 2: (Pipeline) N/A
Category 3: (Double Up) Positive Phase, Condition 1 through 4, Positive Pivots which means can eitherbuy 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)
P Reports November 18th. If holds Friday’s low, then could see more upside. Note: AAPL is trying to compete in the streaming radio space, so might wait until AAPL earnings
TEX Over R1 no reason not to try this with a stop under Friday’s low
PRU Reports November 6th. Had an opening range reversal at the end of Friday’s session. Now, has to hold Friday low to keep going
MNST Reports November 6th. Would prefer an ORR against the 10 DMA risk now 2 days of good volume, back over the 10 DMA. Risk is 16.97 Friday low and could also look for an ORR
ADSK Reports November 14th. If Fridays low holds, and it can get back over 40.00 worth another look.
Category 4: (Rip Tide) N/A
Phase Change:
PETM Reports November 13th Unconfirmed phase change to bullish. Good risk is 72.37 the 10 dma. Needs to stay over the 50 DMA and close there for next resistance at 74.00
C Inside day. Like this again after it held the 50 DMA if it can clear R1 which lines up with Friday high
AGO Reports November 7th. Hovering on the 200 DMA but still looks like it could see 22.00 or better. 20.36 the best risk.
UAL Inside day on the Converging moving Like to see Friday’s low hold and a move over R1. 33.64 is a gap overhead to fill
Shorts: Have a few on the focus list will be watching but not necessarily recommending here.
Category 5: Titanic-N/A
Category 6: White Cap-N/A
Bye For Now
