With the market (Dow) rallying 111.00, we have the fewest number of positions in the portfolio we have had since early September. And there’s the disconnect. The S&P closes on new highs, the Dow negates the topping candle looking like it’s headed back up to the September highs. The small caps and NASDAQ continue their sideways digestion with now 2 doji candle days. So, why are we so light? Partly responsible is earnings season. As a general policy, we exit before a report and do not enter a swing trade 4 days before one. (51 US companies report on Wednesday!) Second, is the overbought conditions in the indices. Yes, things overbought can get more overbought, but our model is based on risk/reward parameters. Third, is the upcoming FOMC. Not that we stake our old positions on Federal Reserve Policy; we do tend to take the safer route and with all the other factors aforementioned, wait until that dust settles.
S&P 500 (SPY) Subscribers: Positive pivots in all indices
Russell 2000 (IWM) One could argue 3 shooting star candles last 3 days-which means either a new launching pattern emerging, or a topping pattern. Seems the latter.
Dow (DIA) Cleared 156.20 handily. Overhead channel resistance at 157-there’s the risk/reward I am referring to
Nasdaq (QQQ) Similar argument on those shooting stars as in IWM here
XLF (Financials) Negated the topping candle and a super big focus for Wednesday post Fed. Lots of potential Subscribers: The 10 DMA will be our risk
SMH (Semiconductors) The power of negating topping candles-this cleared 40.62 on Monday-and whammo!
XRT (Retail) Inside day near the highs. Now, that’s interesting.
IBB (Biotechnology) Digesting its recent move
IYR (Real Estate) Confirmed phase change to Recovery-which is a downgrade
XHB (Homebuilders) Digesting
GLD Sitting on the 50 DMA Subscribers: SLV 2 inside days which means either an add over the highs or better exit under the lows
USO (US Oil Fund)Inside day Subscribers: P1 is 35.72
OIH (Oil Services) Cleared the brick wall candle at 49.78
XLE (Energy) Looks strong
XOP (Oil and Gas Exploration) 72.16 now the point to clear
TBT (Ultrashort Lehman 20+ Year Treasuries) FOMC 2:00 EST
UUP (Dollar Bull) If confirms through 21.45 will reverse the downtrend
VNM (Vietnam) Subscribers: Like now over 19.25
URA (Global X Uranium) Subscribers: Like through 15.00
FXI (China) Subscribers: Needs to confirm now over the 200 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: (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:
TEX Over R1 no reason not to try this with a stop under today’s low
PLD inside day. If today’s low holds, then look for move over R1 and today’s high which line up
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:
LVS R1 takes out the 10 DMA and today’s high with risk today’ low
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)
KORS Reports November 13th before open At this point have to wait for 78.83 the highs to clear and do as a day to miniswing trade
MAS Like against the 21.30 level still
ATI 2 inside days. Has to hold today’s low then and clear today’s high.
ZMH If holds today’s low, still like it to new highs
GS doji day and now 162.50 has to clear once and for all. Then can risk 161.00
PRU Reports November 6th. A rare new high trade for me-so for mini if sets up, is what I would look for. In this case, I like to use the old high and the pivots if we buy strength
FITB Small stock over the 80 monthly moving average. Has to hold today’s low and really clear 19.29
ADSK Reports November 14th. Improved in condition which means has to hold S1 and the 10 DMA and now clear 40.52 to keep going
Category 4: (Rip Tide) N/A
Phase Change:
AGO Reports November 7th. Took a small partial profit and now with the 2nd hammer candle since Friday, will use the 200 DMA as a guide to stick or not
GMCR Inside day holding the recent bottoming formation. 63.30 is the 10 DMA and a tight risk-has to clear the 200 DMA as well at 66.27 but we can worry about that later.
BXP If today’s low holds, like over R1 and the 10 DMA as moving averages begin to converge
Shorts: None setup well right here
Bye For Now
