So there was the disconnect! We came in light; the market was on new highs and rich; the Fed said nothing new; the market took a tumble, but not too badly and here we are. Fact-The Small caps or Russell 2000 fell the hardest on more than average the daily volume (Distribution Day), with a bearish engulfing pattern. Fact-IWM also held the runaway gap. Therefore simply put; if IWM can hold here and firm up Thursday-not so bad. If IWM gaps lower and leaves a potential island top-not so good.
S&P 500 (SPY) Held the 10 DMA but a distribution day and not clear on whether it was a key reversal day or not Subscribers: Pivots negative in all indices
Russell 2000 (IWM) Said it all above-except one thing-wrote about 3 shooting stars in Tuesday night’s daily-good candlestick lesson
Dow (DIA) Close to the top of channel and could go either way-again, clearest signal should come from IWM
Nasdaq (QQQ) Taking a leadership role which makes this scenario even more interesting and certainly not ghoulish.
XLF (Financials) If clears 20.90 that will give this new life
SMH (Semiconductors) Held the 10 DMA. Not ruling this out to clear the recent highs and keep going
XRT (Retail) Still looks ok-again could be digesting or reversing-need another day
IBB (Biotechnology) Been looking here every time the market gets weaker-why? The thrill of the bull move is gone
IYR (Real Estate) Interesting Doji and a good place to look for a move over the 200 DMA
GLD Sitting on the 50 DMA Subscribers: SLV not as pretty as a gap up that didn’t fill would look, but I am still positive
USO (US Oil Fund)Unconfirmed phase change to Distribution Subscribers: R1 is what we are watching for now
XLE (Energy) still a place to look
UUP (Dollar Bull) Confirmed a bottoming formation if holds 21.40
FXI (China) Subscribers: Back over the 50 and 200 DMAs-watching
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 Inside day. A fave here after the correction.Over R1 no reason not to try this with a stop under today’s low
Category 2: (Pipeline) N/A
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)
POST Earnings Trade: EXPE If this gaps over the 200 DMA 57.67 and closes there for 2 days, we got a ginormous island bottom in a stock I was sour on for some time
LVS If holds 70.38 still looks good for a test of the highs and possibly higher
KORS Reports November 13th before open Inside day.At this point have to wait for 78.83 the highs to clear and do as a day to miniswing trade
ZMH 87.95 is S1 and good risk as this is holding the 10 DMA and still looks poised
SLB 93.24 support. Should clear the recent highs, but looks like it could
QCOM Inside day. Like S1 68.80 as risk and over 69.39 looks good
GS After a doji day, today was an inside day. Makes 160.14 a good risk and over 163.11 should bring in buyers
SPLK If holds today’s low, then could still have more to go after it takes out recent highs
FITB Over 19.31 and an opening range setup will look at for a swing
Category 4: (Rip Tide) N/A
Phase Change:
AGO Reports November 7th. In ¾ of the position against it holding the 200 DMA
NNN Reports November 5th. If holds the 200 DMA 34.79 and clears R1 35.09, then could be a good miniswing trade
Shorts:
Category 5: N/A
Category 6: White Cap-Having a 2-3 Day correction over the pivots.. In a Negative Phase, Positive Pivots. Can sell an Opening Range High Failure if happens below R1 or previous day high whatever is higher and/or weakness if breaks S1 and prior day’s lows
COH Classic if breaks S1 with a risk over today’s high and the 10 DMA
SODA A good risk is the 200 DMA 58.81 if this continues to show weakness with a target of 55.00 to start.
Bye For Now
